Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

NOTE: PLEASE ANSWER MY QUESTION. Chegg has a tendency to answer my questions partially or sometimes give incorrect answers. I'm paying for this service and

NOTE: PLEASE ANSWER MY QUESTION. Chegg has a tendency to answer my questions partially or sometimes give incorrect answers. I'm paying for this service and deserve hat I pay for. And I'm aware of your 'one question' policy. The question below is one question. It's separated into two different parts.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(1A) Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for pricing and other purposes. The proprietor of the company believes that costs are driven primarily by the size of customer lawns, the size of customer garden beds, the distance to travel to customers, and the number of customers. In addition, the costs of maintaining garden beds depends on whether the beds are low maintenance beds (mainly ordinary trees and shrubs) or high maintenance beds (mainly flowers and exotic plants). Accordingly, the company uses the five activity cost pools listed below:

Activity Cost Pool Activity Measure
Caring for lawn Square feet of lawn
Caring for garden bedslow maintenance Square feet of low maintenance beds
Caring for garden bedshigh maintenance Square feet of high maintenance beds
Travel to jobs Miles
Customer billing and service Number of customers

The company already has completed its first stage allocations of costs and has summarized its annual costs and activity as follows:

Activity Cost Pool Estimated Overhead Cost Expected Activity
Caring for lawn $ 86,600 170,000 square feet of lawn
Caring for garden bedslow maintenance $ 39,200 26,000 square feet of low maintenance beds
Caring for garden bedshigh maintenance $ 55,200 20,000 square feet of high maintenance beds
Travel to jobs $ 3,400 17,000 miles
Customer billing and service $ 7,100 32 customers

Required:

Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.)

Activity Cost Pool Activity Rate
Caring for lawn per square ft of lawn
Caring for garden bedslow maintenance per square ft of low maintenance beds
Caring for garden bedshigh maintenance per square ft of high maintenance beds
Travel to jobs per mile
Customer billing and service per customer

(1B) Klumper Corporation is a diversified manufacturer of industrial goods. The companys activity-based costing system contains the following six activity cost pools and activity rates:

Activity Cost Pool Activity Rates
Supporting direct labor $ 7 per direct labor-hour
Machine processing $ 4 per machine-hour
Machine setups $ 45 per setup
Production orders $ 170 per order
Shipments $ 125 per shipment
Product sustaining $ 800 per product

Activity data have been supplied for the following two products:

Total Expected Activity

K425 M67
Number of units produced per year 200 2,000
Direct labor-hours 925 40
Machine-hours 3,000 30
Machine setups 15 3
Production orders 15 3
Shipments 30 3
Product sustaining 3 3

Required:

How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system?

Activity Cost Pool K425 M67
Supporting direct labor
Machine processing
Machine setups
Production orders
Shipments
Product sustaining
Total overhead cost $0 $0

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing That Matters Case Studies Discussion Guide

Authors: Norman Marks

1st Edition

B089J5JCL2, 979-8650410546

More Books

Students also viewed these Accounting questions

Question

How does selection differ from recruitment ?

Answered: 1 week ago