Q1.

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 beds-low maintenance Square feet of low maintenance beds Caring for garden beds-high 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: Estimated Overhead Activity Cost Pool Cost Expected Activity Caring for lawn $ 88, 200 165, 000 square feet of lawn Caring for garden beds-low maintenance $ 40, 800 28,000 square feet of low maintenance beds Caring for garden beds-high maintenance $ 60, 060 22,000 square feet of high maintenance beds Travel to jobs $ 3,800 19, 000 miles Customer billing and service $ 7,900 28 customers Required: Compute the activity rate for each of the activity cost pools. Note: Round your answers to 2 decimal places. Activity Cost Pool Activity Rate Caring for lawn per square feet of lawn Caring for garden beds-low maintenance per square feet of low maintenance beds Caring for garden beds-high maintenance per square feet of high maintenance beds Travel to jobs per mile Customer billing and service per customerKlumper Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains the following six activity cost pools and activity rates: Activity Cost Pool Activity Rates Supporting direct labor $ 8 per direct labor-hour Machine processing 4 per machine-hour Machine setups $ 40 per setup Production orders $ 150 per order Shipments 120 per shipment Product sustaining 825 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 1, 075 50 Machine-hours 3,200 40 Machine setups 2 Production orders 9 Shipments 18 NNNI Product sustaining 2 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 $ 0The operations vice president of Security Home Bank has been interested in investigating the efficiency of the bank's operations. She has been particularly concerned about the costs of handling routine transactions at the bank and would like to compare these costs at the bank's various branches. If the branches with the most efficient operations can be identified, their methods can be studied and then replicated elsewhere. While the bank maintains meticulous records of wages and other costs, there has been no attempt thus far to show how those costs are related to the various services provided by the bank. The operations vice president has asked your help in conducting an activity-based costing study of bank operations. In particular, she would like to know the cost of opening an account, the cost of processing deposits and withdrawals, and the cost of processing other customer transactions. The Westfield branch of Security Home Bank has submitted the following cost data for last year: Teller wages $ 156, 000 Assistant branch manager salary 70, 000 Branch manager salary 89, 000 Total $ 315, 000 Virtually all other costs of the branch-rent, depreciation, utilities, and so on-are organization-sustaining costs that cannot be meaningfully assigned to individual customer transactions such as depositing checks. In addition to the cost data above, the employees of the Westfield branch have been interviewed concerning how their time was distributed last year across the activities included in the activity-based costing study. The results of those interviews appear below: Distribution of Resource Consumption Across Activities Processing Processing Other Opening Deposits and Customer Other Accounts Withdrawals Transactions Activities Totals Teller wages 4% 69% 21% 6% 100% Assistant branch manager salary 15% 16% 26% 43% 100% Branch manager salary 4% 0% 18% 78% 100% The manager of the Westfield branch of Security Home Bank has provided the following data concerning the transactions of the branch during the past year: Activity Total Activity at the Westfield Branch Opening accounts 245 new accounts opened Processing deposits and withdrawals 51, 000 deposits and withdrawals processed Processing other customer transactions 1, 200 other customer transactions processedRequired: 1. Compute the activity rates for the activity-based costing system. Note: Round your answers to 2 decimal places. Activity Cost Pool Activity Rate Opening accounts per account opened Processing deposits and withdrawals per deposit or withdrawal Processing other customer transactions per other customer transactionDurban Metal Products, Limited, of the Republic of South Africa makes specialty metal parts used in applications ranging from the cutting edges of bulldozer blades to replacement parts for Land Rovers. The company uses an activity-based costing system for internal decision-making purposes. The company has four activity cost pools as listed below: Activity Cost Pool Activity Measure Activity Rate Order size Number of direct labor-hours $ 17.70 per direct labor-hour Customer orders Number of customer orders $ 364.00 per customer order Product testing Number of testing hours $ 74.00 per testing hour Selling Number of sales calls $ 1, 489.00 per sales call The managing director of the company would like information concerning the cost of a recently completed order for heavy-duty trailer axles. The order required 140 direct labor-hours, 15 hours of product testing, and 5 sales calls. Required: What is the total overhead cost assigned to the order for heavy-duty trailer axles? Activity Cost Pool ABC Cost Order size Customer orders Product testing Selling Total overhead cost 0Foam Products, Incorporated, makes foam seat cushions for the automotive and aerospace industries. The company's activity-based costing system has four activity cost pools, which are listed below along with their activity measures and activity rates: Activity Cost Pool Activity Measure Activity Rate Supporting direct labor Number of direct labor-hours $ 14 per direct labor-hour Batch processing Number of batches $ 90 per batch Order processing Number of orders $ 289 per order Customer service Number of customers $ 2, 623 per customer The company just completed a single order from Interstate Trucking for 1,700 custom seat cushions. The order was produced in five batches. Each seat cushion required 0.4 direct labor-hours. The selling price was $141.80 per unit, the direct materials cost was $106 per unit, and the direct labor cost was $14.90 per unit. This was Interstate Trucking's only order during the year. Required: Calculate the customer margin on sales to Interstate Trucking for the year. Interstate Trucking Customer Margin-ABC Analysis Costs: 0 Customer margin $ 0