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: 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:  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 activity rate for the deliveries activity cost pool, we need to divide the total cost of the deliveries activity cost pool by the total activity for the year:

Total cost of deliveries activity cost pool = $455,000
Total activity for the year = 18,200 deliveries

Activity rate = Total cost of deliveries activity cost pool / Total activity for the year
Activity rate = $455,000 / 18,200 deliveries
Activity rate = $25 per delivery

Therefore, the total overhead cost per delivery according to the activity-based costing system would be $25, which rounded to the nearest whole cent is $26.50. Therefore, the best choice is B.

Foster Florist Specializes in Large Floral Bouquets for Hotels and Other