Fogle Florist specializes in large floral bouquets for hotels and other commerci
ID: 2465718 • Letter: F
Question
Fogle Florist specializes in large floral bouquets for hotels and other commercial spaces. The company has provided the following data concerning its annual overhead costs and its activity based costing system: Overhead costs: Wages and salaries Other expenses Total $176,000 77,000 $253,000 Distribution of resource consumption: Activity Cost Pools Making BouquetsDelivery 20% 60% Other Total Wages and salaries Other expenses 55% 20% 25% 20% 100% 100% The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs The amount of activity for the year is as follows: Activity Cost Pool Making bouquets Delivery Activity 42,020 bouquets 15,500 deliveries What would be the total overhead cost per bouquet according to the activity based costing system? In other words, what would be the overall activity rate for the making bouquets activity cost pool? (Round to the nearest whole cent.) O $2.67 per bouquets O $2.57 per bouquets O $2.65 per bouquets $2.72 per bouquetsExplanation / Answer
1.
Total Overhead cost per bouquet = Total cost / Number of bouquet
Total Overhead cost per bouquet = $112,200 / 42,020 =$2.67 per bouquet
2.
Total Overhead cost per delevery = Total cost / Number of deliveries
Total Overhead cost per delevery = $68,500 / 8900 = $7.70 per Delivery
3.
Activity rate for Supervising = Total supervising Overheads / Total Supervising activity
Activity rate for Supervising = $ 67,400 / 2,880 = $23.40
Wages and salaries ($176,000*55%) $96,800 Other expenses ( $77,000*20%) $15,400 Total cost $112,200