Scenario:

Mr. Beridon received your requests for information and returned data which you have compiled in an Microsoft Excel spreadsheet (see document template). He also said, "We grow sod and trees at Jeemp Farms. We sell the sod mainly to home builders in the area, although we sell to some individuals who are purchasing square footages to re-sod their yard. Many home builders will purchase to sod an entire subdivision. They then may come back to us to purchase trees for the yards. It really is a package deal. For builders like that, we are a one-stop-shop. In most cases, however, we sell the trees to orchards and some individuals. The purchaser is responsible for all shipping costs related to their product."

"Our production process is different for each product. For sod, we plant the seed, irrigate, cut, and roll the sod and then transport it. For the trees, we plant the root stock, graft the tree, water until a particular maturity and then dig it up and sell it. We inspect the plants as needed to make sure we are producing a quality product that is disease-free."

"We have delayed purchasing some machinery that reduces time for the planting of the trees because it is a large up-front cost and we don't want to have a huge outlay of cash if our profits keep going down."

"The grass does not require as much irrigation as the trees, as it is at a lower elevation than the tree acres and is closer to the creek; it gets a lot of the run off."

"Historically, we have always been able to sell everything we produce. Hopefully, that will continue since Houston is expanding rapidly."

First:Compute the product costs for the sod and trees under traditional and ABC costing using the numbers below : second.

Answer the following:

• Describe any factors that could skew your results. In other words, explain if there is one method of costing that could make a product look more favorable than it really is.

Estimated Overhead (last year's numbers)
Planting	47,000
Irrigation	19,000
Product Support	19,046
Harvesting	21,567
Inspections	4,564
Property Taxes	6,754
TOTAL	117,931

F IN 1 #produced and sold of each product 2 St. Augustine Sod in sq feet 3 Texas Pecan Trees B C D E January February March April May 140,763 178256 85,948 177,005 789 987 456 456 G H I June July August September October November December TOTAL 145,800 159,626 116,407 130,832 62,790 132715 62081 164628 867 680 4 57 667 907 789 956 897 5 TRADITIONAL COSTING 5 Basic Information ABC COSTING % of overhead costs by product St. Augustine Sod in sq feet Texas Pecan Trees year old trees Planting Irrigating roduct SuppoHarvestingProperty TaxesInspections 20% 20% 7% 40% 40% 80% 80% 93% 60% 60% 90% 10% B Planting Irrigating roduct SuppoHarvestingProperty TaxesInspections TOTALS O Selling Price Per Unit 1 Direct Materials Per Unit 2 Direct Labor Per Unit 3 Direct Labor Hours Per Unit 4 Estimated Annual Production and Sales Trees $ 12.99 $ $ 0.99 $ $ 2.00 $ 0.2 Sod 0.38 0.01 0.09 0.009 Overhead costs by product St. Augustine Sod in sq feet Texas Pecan Trees year old trees 6 Estimated Overhead (last year's numbers) 7 Planting 8 Irrigation 9 Product Support CO Harvesting -1 Inspections 2 Property Taxes -3 TOTAL 47,000 19,000 19,046 21,567 4,564 6,754 117,931 Overhead Planting Irrigation Product Support Harvesting Inspections Property Taxes TOTAL 47,000 19,000 19,046 21,567 4,564 6,754 117,931 A -5 Sod -7 Estimated Total Direct Labor Hours 8 Predetermined Overhead Rate DO NOT ROUND DO NOT ROUND ABC Costing: Trees Sales Direct Materials Direct Labor Manufacturing Overhead Product Margin O Traditional Costing 1 Sales 2 Direct Materials 3 Direct Labor -4 Manufacturing Overhead 5 Product Margin per unit 7 per unit