ge allocation,time-driven activity-based costing, service sector. LawnCare USA provides faw bid n care and landscaping services to commercial clients. LawnCare USA uses activity-based costing to on jobs and to evaluate their profitability, LawnCare USA reports the following budgeted annual costs: Wages and salaries Depreciation Supplies Other overhead Total overhead costs $360,000 72,000 120,000 288,000 $840,000 John Gilroy, controller of LawnCare USA, has established four activity cost pools and the following bud- geted activity for each cost pool: Activity Cost Pool Estimating jobs Lawn care Landscape design Other Activity Measure Number of job estimates Number of direct labor-hours Number of design hours Facility-sustaining costs that are not Total Activity for the Year 250 estimates 10,000 direct labor-hours 500 design hours Not applicable allocated to jobs Gilroy estimates that LawnCare USA's costs are distributed to the activity-cost pools as follows Lawn Care 70% 65% 100% 50% Landscape Design 15% 10% 0% 20% Other 10% 15% 0% 15% Total 100% 100% 100% 100% Estimating Jobs 5% 10% Wages and salaries Depreciation Supplies Other overhead 15% Sunset Office Park, a new development in a nearby community, has contacted LawnCare USA to provide an estimate on landscape design and annual lawn maintenance. The job is estimated to require a single landscape design requiring 40 design hours in total and 250 direct labor-hours annually. LawnCare USA has a policy of pricing estimates at 150% of cost. 1. 2. Job? Allocate LawnCare USA's costs to the activity-cost pools and determine the activity rate for each pool. Estimate total cost for the Sunset Office Park job. How much would LawnCare USA bid to perform the LawnCare USA does 30 landscape designs for its customers each year. Estimate the total cost for the Sunset Office park job if LawnCare USA allocated costs of the Landscape Design activity based on the number of landscape designs rather than the number of landscape design-hours. How much would LawnCare USA bid to perform the job? Which cost driver do you prefer for the Landscape Design activ- ity? Why? Sunset Office Park asks LawnCare USA to give an estimate for providing its services for a 2-year period. What are the advantages and disadvantages for LawnCare USA to provide a 2-year estimate? 3. 4