Foster Florist annual overhead costs and its activity based

Foster Florist annual overhead costs and its activity based costing system in large floral bouquets for hotets and other commercial spaces. The company has provided the following data concerning its Wages and salaries other expenses Total 70,000 50,000 $120,000 Distribution of resource consumption Activity Cost Pools Making Delivery 20% 25% Total 100% 100% other 70% 45% other expenses 30% 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 Activity 40,000 bouquets Delivery 1,000 deliveries

Solution

STATEMENT SHOWING FIRST STAGE ALLOCATION OF COST TO ACTIVITY POOL BASIS OF TOTAL Making Deivery OTHERS APPORTION IN $ Bouquet IN $ IN $ Wages and salaries 70:20:10 70,000 49,000 14,000 7,000 Other Overheads cost 45:25:30 50,000 22,500 12,500 15,000 TOTAL COST OF ACTIVITY 120,000 71,500 26,500 22,000 STATEMENT SHOWING ACTIVITY RATE OF ACTIVITY POOL Activity Total Expected Activity ACTIVITY COST POOL Measures Overheads Activity Rate Making Bouquets Bouquets 71,500 40,000 1.79 Per bouquet Delivery Delivery 26,500 1,000 26.50 Per delivery Answer is $ 26.50