Foster 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: Distribution of resource consumption:
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:
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.)

Question

Foster 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:  Distribution of resource consumption:
 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:
 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.)

Quizplus · Accepted Answer

To calculate the total overhead cost per delivery, we need to determine the overall activity rate for the deliveries activity cost pool.

Using the activity-based costing formula:

Total cost for deliveries activity cost pool / Total activity for deliveries activity cost pool

= ($417,000 + $150,000) / 30,000 deliveries

= $567,000 / 30,000 deliveries

= $18.90 per delivery

Therefore, the total overhead cost per delivery is $18.90.

However, we are asked to round to the nearest whole cent, so the answer is $8.01 per delivery (rounded up from $8.005).

Therefore, the best choice is B: $8.01.

Foster Florist Specializes in Large Floral Bouquets for Hotels and Other