Foster Florist specializes in large floral bouquets for hotels and other commerc
ID: 2552101 • Letter: F
Question
Foster 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:
Distribution of resource consumption:
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:
What would be the total overhead cost per delivery according to the activity-based costing system? In other words, what would be the overall activity rate for the deliveries activity cost pool? (Round to the nearest whole cent.)
Overhead costs: Wages and salaries $ 70,000 Other expenses 50,000 Total $ 120,000Explanation / Answer
first let us know the total cost allocated to delivery
=> [wages and salaries *20% allocation to delivery] + [ other expenses *25% allocation to delivery]
=> [$70,000 * 20%] + [ $50,000*25%]
=>$14,000 + $12,500
=>$26,500.
total cost allocated to delivery / number of deliveries
=>$26,500 / 1,000
=>$26.50.
total overhead cost per deilvery = $26.50.