Question
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.
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(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.)
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(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?
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