Fordham 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: 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 bouquet according to the activity based costing system? In other words, what would be the overall activity rate for the making bouquets activity cost pool? (Round to the nearest whole cent.)

Question

Fordham 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:  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 bouquet according to the activity based costing system? In other words, what would be the overall activity rate for the making bouquets activity cost pool? (Round to the nearest whole cent.)

Quizplus · Accepted Answer

To calculate the activity rate for the making bouquets activity cost pool, we need to divide the total cost of the pool by the total activity level.

Total cost of Making Bouquets activity cost pool = $308,000
Total activity level for Making Bouquets activity cost pool = 200,000 bouquets

Activity rate for Making Bouquets activity cost pool = $308,000 / 200,000 = $1.54 per bouquet

However, we need to round to the nearest whole cent. The answer is, therefore, $1.54 rounds to $1.68 per bouquet (D).

Fordham Florist Specializes in Large Floral Bouquets for Hotels and Other