Fogle Florist specializes In large floral bouquets for hotels and other commerci
ID: 342134 • 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 salarles Other expenses Total $159,000 103,000 $262,000 Distribution of resource consumption: Activity Cost Pools Making Bouquets 50% 2 5% Total Wages and salarles Other expenses Delivery 35% 45% Other 15% 30% 100% 100% The "Other" actlvity cost pool consists of the costs of idle capacity and organization-sustaining costs. The amount of activity for the year Is as follo ws: Activity Cost Pool Making bouquets Delivery Activity 40,325 bouquets 10,100 deliverles 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) O $8.39 per delivery $10.10 per delivery O $10.96 per delivery O $9.67 per deliveryExplanation / Answer
B.$10.10 per delivery
total cost allocated to deliveries:
wages and salaries (0.35 *$159,000)
cost per delivery = total cost allocated to delivery / total deliveries
=>$102,000 / 10,100 deliveries
=>$10.10 per delivery.
wages and salaries (0.35 *$159,000)
$55,650 other expenses (0.45*$103,000) $46,350 total $102,000