As You Like It 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's 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:
Required: compute the activity rate for each of the activity cost pools.
Activity Cost Pool Estimated Expected Activity Overhead rate = Estimated/Expected activity
Caring for lawn............... $77,400 180,000 $0.43
Caring for garden beds-
low maintenance......... $30,000 ...
This provides the steps to calculate the activity rate for each of the activity cost pools