Question

Foss 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 salaries $70,000 Other expenses 40,000 Total $110,000 Distribution of Resource Consumption: Activity Cost Pools Making Bouquets Delivery Other Total Wages and salaries 55% 35% 10% 100% Other expenses 45% 25% 30% 100% 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 Making bouquets 20,000 bouquets Delivery 7,000 deliveries What would be the total overhead cost per bouquet according to the activity-based costing system, rounded to the nearest whole cent? In other words, what would be the overall activity rate for the Making Bouquets activity cost pool?

Answer 1