Green Thumb USA provides lawn care and landscaping services to commercial clients. Green Thumb USA uses activity based costing to bid on jobs and to evaluate their profitantzility. Green Thumb USA reports the following budgeted annual costs: (Click the icon to view budgeted annual costs.) (Click the icon to view additional information.) Read the requirements Requirement 1. Allocate Green Thumb USA's costs to the activity-cost pools and determine the activity rate for each pool. Start by allocating Green Thumb USA's costs to the activity-cost pools. (Enter zero in any cell if no amount should be allocated to the activity-cost pool.) Lawn Landscape Estimating jobs care design Other Total | Wages and salaries Depreciation Supplies Other overhead Total - X Data table - X Data table John Butler, controller of Green Thumb USA, has established four activity cost pools and the following budgeted activity for each cost pool: $ Wages and salaries Depreciation Supplies 270,000 62,000 w-cost pool.) 115,000 290,000 Other overhead $ 737,000 Total overhead costs Activity Cost Pool Activity Measure Total Activity for the Year Estimating jobs Number of job estimates 100 estimates Lawn care Number of direct labor-hours 5,000 direct labor-hours Landscape design Number of design hours 625 design hours Other Facility-sustaining costs that are not allocated to jobs Not applicable Butler estimates that Green Thumb USA's costs are distributed to the activity cost pools as follows: Estimating Landscape Jobs Lawn Care Design Other Total Wages and salaries 10% 55% 15% 20% 100% Depreciation 20% 45% 15% 20% 100% Supplies 0% 100% % 0% 0% 100% Other overhead 20% % 60% 15% 5% 100% O Print Done Shasta Office Park, a new development in a nearby community, has contacted Green Thumb 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 100 direct labor-hours annually. Green Thumb USA has a policy of pricing estimates at 150% of cost. Requirements 1. Allocate Green Thumb USA's costs to the activity-cost pools and determine the activity rate for each pool. 2. Estimate total cost for the Shasta Office Park job. How much would Green Thumb USA bid to perform the job? 3. Green Thumb USA does 34 landscape designs for its customers each year. Estimate the total cost for the Shasta Office park job if Green Thumb 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 Green Thumb USA bid to perform the job? Which cost driver do you prefer for the Landscape Design activity? Why? 4. Shasta Office Park asks Green Thumb USA to give an estimate for providing its services for a 2-year period. What are the advantages and disadvantages for Green Thumb USA to provide a 2-year estimate? Print Done
