Kamber Designs produces floral bouquets for commercial businesses (i.e.hotels) and uses an activity-based costing system.The company estimated that it would design 15,000 bouquets, make 2,000 deliveries totaling 25,000 miles, and accept 300 online orders.Data concerning overhead costs and activity pools is as follows: $\begin{array}{lr}
\text { Bouquet designs } & \$ 60,000 \
\text { Deliveries } & 21,000 \
\text { Online ordering } & 6,000 \
\quad \text { Total } & \$ 87,000
\end{array}$ During May, the company made 1,400 bouquets using 1,300 designs, made 420 deliveries, and accepted 30 online orders.Using activity-based costing, what is the approximate overhead cost per bouquet during May?

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Quizplus · Accepted Answer

The overhead cost per bouquet is calculated by dividing the total overhead costs by the number of bouquets made. The total overhead costs for May are calculated by allocating the costs based on the activity levels: Bouquet designs: (1,300/15,000) * $60,000 = $5,200; Deliveries: (420/2,000) * $21,000 = $4,410; Online ordering: (30/300) * $6,000 = $600. Total overhead for May = $5,200 + $4,410 + $600 = $10,210. Overhead cost per bouquet = $10,210 / 1,400 = $7.29.

Kamber Designs Produces Floral Bouquets for Commercial Businesses (I During May, the Company Made 1,400 Bouquets Using 1,300 Designs