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Greener Lawn, Inc., provides lawn care and landscaping services to commercial clients. Greener Lawn uses activity-based costing to bid on jobs and to evaluate their profitability. Greener Lawn reports the following annual costs:

Wages and salaries $480,000

Depreciation 54,000

Supplies 85,000

Other overhead 118,000

Total overhead costs $737,000

John Gibson, controller of Greener Lawn, has established four activity costs pools and estimates that Greener Lawn's costs are distributed to the activity-cost pools as follows:

Activity Cost Pool	Activity Measure	Total Activity for the Year
Estimating jobs	Number of job estimatess	175 estimates
Lawn care	Number of direct labor-hours	5,000 direct labor-hours
Landscape design	Number of design hours	425 design hours
Other	Facility-sustaining costs that are not	Not applicable
	allocated to jobs

He estimates that Greener Lawn's costs are distributed to the activity-cost pools as follows.

	Estimating	Lawn	Landscape
	Jobs	Care	Design	Other	Total
Wages and salaries	10%	55%	15%	20%	100%
Depreciation	5%	50%	20%	25%	100%
Supplies	0%	100%	0%	0%	100%
Other overhead	5%	40%	25%	30%	100%

Requirement 1

Allocate Greener Lawn's costs to the activity-cost pools and determine the activity rate for each pool.

Vista Office Park, a new development in a nearby community, has contacted Greener Lawn to provide an estimate on landscape design and annual lawn maintenance. The job is estimated to require a single landscape design requiring 40 design hours in total and 175 direct labor-hours annually. Greener Lawn has a policy of pricing estimates at 150% of allocated cost.

Required

1.	Allocate Greener Lawn's costs to the activity-cost pools and determine the activity rate for each pool.
2.	Estimate total cost for the Vista Office Park job.
3.	How much should Greener Lawn bid to perform the job?
4.	Vista Office Park asks Greener Lawn to give an estimate for providing its services for a 2-year period. What are the advantages and disadvantages for Greener Lawn to provide a 2-year estimate?

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