Tierra Plant Services completed a special landscaping job for Choate Company. Tierra uses ABC and has the following predetermined overhead allocation rates:
$$\begin{array} { l l c }
& &\text { Predetermined Overhead } \
\text { Activity } & \text { Allocation Base } & \text { Allocation Rate } \
\hline\text { Designing } & \text { Number of designs } & \$ 275 \text { per design } \
\text { Plenting } & \text { Number of plants } & \$ 15 \text { per plant }
\end{array}$$ 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:
 $$\begin{array} { l l c } 
& &\text { Predetermined Overhead } \
\text { Activity } & \text { Allocation Base } & \text { Allocation Rate } \
\hline\text { Designing } & \text { Number of designs } & \$ 275 \text { per design } \
\text { Plenting } & \text { Number of plants } & \$ 15 \text { per plant }
\end{array}$$ 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:
 $$\begin{array} { l l c } 
& &\text { Predetermined Overhead } \
\text { Activity } & \text { Allocation Base } & \text { Allocation Rate } \
\hline\text { Designing } & \text { Number of designs } & \$ 275 \text { per design } \
\text { Plenting } & \text { Number of plants } & \$ 15 \text { per plant }
\end{array}$$ 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