Fogle Florist specializes in large floral bouquets for hotels and other commerci
ID: 2653498 • 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:
$156,000
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
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.)
$2.67 per delivery
$5.24 per delivery
$3.95 per delivery
$4.38 per delivery
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:
Explanation / Answer
Overhead Cost Allocated to Delivery Cost = Wages and salaries* 40% + Other expenses*55%
Overhead Cost Allocated to Delivery Cost = 82000*40% + 74000*55%
Overhead Cost Allocated to Delivery Cost = $ 73500
Total overhead cost per delivery = Overhead Cost Allocated to Delivery Cost / No of Delivery
Total overhead cost per delivery = 73500/16800
Total overhead cost per delivery = $4.38 per delivery
Answer
$4.38 per delivery