Tierra Plant Services completed a special landscaping job for Choate Company.Tierra uses ABC and has the following predetermined overhead allocation rates:
$$\begin{array}{l}

\begin{array} { l l l }
&&\underline{\text { Predetermined Averhead} }\
\text { Activity } & \text { Allocation Base } & \text { Allocation Rate } \
\hline \text { Designing } & \text { Number of designs } & \$ 275 \text { per design } \
\text { Planting } & \text { Number of plants } & \$ 15 \text { per plant }
\end{array}
\end{array}$$ The Choate project required $1,200 in landscape materials,$700 in direct labor,one design,and 35 plants.
Requirements:
1.What is the total cost of the work done for Choate?
2.If Choate paid $3,900 for the job,what is the operating income or loss?
3.If Tierra desires an operating income of 50% of cost,how much should the company charge for the Choate project?

Question

Tierra Plant Services completed a special landscaping job for Choate Company.Tierra uses ABC and has the following predetermined overhead allocation rates:
 $$\begin{array}{l}

\begin{array} { l l l } 
&&\underline{\text { Predetermined Averhead} }\
\text { Activity } & \text { Allocation Base } & \text { Allocation Rate } \
\hline \text { Designing } & \text { Number of designs } & \$ 275 \text { per design } \
\text { Planting } & \text { Number of plants } & \$ 15 \text { per plant }
\end{array}
\end{array}$$ The Choate project required $1,200 in landscape materials,$700 in direct labor,one design,and 35 plants.
Requirements:
1.What is the total cost of the work done for Choate?
2.If Choate paid $3,900 for the job,what is the operating income or loss?
3.If Tierra desires an operating income of 50% of cost,how much should the company charge for the Choate project?

Quizplus · Accepted Answer

The Answer of Tierra Plant Services completed a special landscaping job for Choate Company.Tierra uses ABC and has the following predetermined overhead allocation rates:
 $$\begin{array}{l}

\begin{array} { l l l } 
&&\underline{\text { Predetermined Averhead} }\
\text { Activity } & \text { Allocation Base } & \text { Allocation Rate } \
\hline \text { Designing } & \text { Number of designs } & \$ 275 \text { per design } \
\text { Planting } & \text { Number of plants } & \$ 15 \text { per plant }
\end{array}
\end{array}$$ The Choate project required $1,200 in landscape materials,$700 in direct labor,one design,and 35 plants.
Requirements:
1.What is the total cost of the work done for Choate?
2.If Choate paid $3,900 for the job,what is the operating income or loss?
3.If Tierra desires an operating income of 50% of cost,how much should the company charge for the Choate project?

Tierra Plant Services Completed a Special Landscaping Job for Choate