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Question: green thumb gardening is a small gardening service that uses...

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Green Thumb 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 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:

Activity Cost Pool

Activity Measure

Caring for lawn

Square feet of lawn

Caring for garden beds–low maintenance

Square feet of low maintenance beds

Caring for garden beds–high maintenance

Square feet of high maintenance beds

Travel to jobs

Miles

Customer billing and service

Number of customers

The company already has completed its first stage allocations of costs and has summarized its annual costs and activity as follows:

Activity Cost Pool

Estimated
Overhead
Cost

Expected Activity

Caring for lawn

$

81,000

175,000

square feet of lawn

Caring for garden beds–low maintenance

$

33,600

28,000

square feet of low maintenance beds

Caring for garden beds–high maintenance

$

60,280

22,000

square feet of high maintenance beds

Travel to jobs

$

5,200

19,000

miles

Customer billing and service

$

10,700

22

customers

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