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= Homework: ACC-360 Topic 4 Assignment Question 5, P5-35 (similar to) Part 1 of 9 HW Score: 0%, 0 of 100 points Points: 0 of 15 Greener Lawn USA provides lawn care and landscaping services to commercial clients. Greener Lawn USA uses activity-based costing to bid on jobs and to evaluate their profitability. Greener Lawn USA reports the following budgeted annual costs: (Click the icon to view budgeted annual costs.) (Click the icon to view additional information.) Read the re Data table Data table Wages and salaries $ Total Activity for the Year Depreciation 270,000 56,000 225 estimates pool.) Supplies 110,000 5,000 direct labor-hours 318,000 Other overhead $ 754,000 Total overhead costs Activity Cost Pool Activity Measure Requireme Estimating jobs Number of job estimates Start by all Lawn care Number of direct labor-hours Landscape design Other Wages and Number of design hours 300 design hours Facility-sustaining costs that are not allocated to jobs Not applicable Garcia estimates that Greener Lawn USA's costs are distributed to the activity-cost pools as follows: Depreciatio Supplies Estimating Jobs Lawn Care Landscape Design Other Total Other over Wages and salaries 5% 60% 30% 5% 100% Depreciation 15% 65% 10% 10% 100% Total Supplies 0% 100% 0% 0% 100% Other overhead 20% 55% 10% 15% 100% Help m Shasta Office Park, a new development in a nearby community, has contacted Greener Lawn USA to provide an estimate on landscape design and annual lawn maintenance. The job is estimated to require a single Print Done Save Clear all Check answer 5. Greener Lawn USA provides lawn care and landscaping services to commercial clients. Greener Lawn USA uses activity-based costing to bid on jobs and to evaluate their profitability. Greener Lawn USA reports the following budgeted annual costs: 1(Click the icon to view budgeted annual costs.) 2(Click the icon to view additional information.) Read the requirements. Requirement 1. Allocate Greener Lawn USA's costs to the activity-cost pools and determine the activity rate for each pool. Start by allocating Greener Lawn USA's costs to the activity-cost pools. (Enter zero in any cell if no amount should be allocated to the activity-cost pool.) Estimating jobs Lawn care Landscape design Other Total Wages and salaries Depreciation Supplies Other overhead Total Now select the formula used to determine the cost driver rates, then calculate the activity rate for each pool. (Abbreviation used: DLH = Direct labor-hour. Round the answers to the nearest cent, "X.XX".) (2) Estimating jobs Lawn care (1) Cost driver rate (3) Landscape design |(4) (5) Requirement 2. Estimate total cost for the Shasta Office Park job. How much would Greener Lawn USA bid to perform the job? Calculate the total costs and bid amount Greener Lawn USA would charge Shasta Office Park. (Round the answers to the nearest cent, "X.XX".) Estimating jobs Lawn care Landscape design Total costs Markup multiplier % Bid estimate Bid estimate Print Requirement 3. Greener Lawn USA does 31 landscape designs for its customers each year. Estimate the total cost for the Shasta Office park job if Greener Lawn USA allocated costs of the Landscape Design activity based on the number of landscape designs rather than the number of landscape design-hours. How much would Greener Lawn USA bid to perform the job? Which cost driver do you prefer for the Landscape Design activity? Why? How much would Greener Lawn USA bid to perform the job? Estimating jobs Lawn care Landscape design Total costs Markup multiplier Bid estimate % Which cost driver do you prefer for the Landscape Design activity? Why? complex than the average design. Using the number of (8). as While the Shasta Office park landscape design is only one of 31 performed by Greener Lawn USA, it accounts for (6). landscape design-hours, making it (7). the cost driver results in a bid estimate that is too low. Using the number of (9). is a more accurate measure of Greener Lawn USA's costs for each job because it (10). Requirement 4. Shasta Office Park asks Greener Lawn USA to give an estimate for providing its services for a 2-year period. What are the advantages and disadvantages for Greener Lawn USA to provide a 2-year estimate? Because the landscape design and estimating costs are only incurred once for the entire job, bidding on a 2 year period (11). However, after submitting an estimate for 2 years, Greener Lawn USA would (12). 1: Data Table Wages and salaries Depreciation Supplies 270,000 56,000 110,000 318,000 Other overhead Total overhead costs 754,000 2: Data Table John Garcia, controller of Greener Lawn USA, has established four activity cost pools and the following budgeted activity for each cost pool: Activity Cost Pool Estimating jobs Lawn care Activity Measure Landscape design Other Number of job estimates Number of direct labor-hours Number of design hours Facility-sustaining costs that are not allocated to jobs Total Activity for the Year 225 estimates 5,000 direct labor-hours 300 design hours Not applicable 2: Data Table John Garcia, controller of Greener Lawn USA, has established four activity cost pools and the following budgeted activity for each cost pool: Activity Cost Pool Estimating jobs Activity Measure Number of job estimates Number of direct labor-hours Number of design hours Total Activity for the Year 225 estimates 5,000 direct labor-hours 300 design hours Lawn care Landscape design Other Facility-sustaining costs that are not allocated to jobs Not applicable Garcia estimates that Greener Lawn USA's costs are distributed to the activity-cost pools as follows: Estimating Jobs Lawn Care Landscape Design Other Total Wages and salaries Depreciation Supplies 5% 60% 30% 5% 100% 15% 65% 10% 10% 100% Other overhead 0% 20% 100% 0% 0% 100% 55% 10% 15% 100% Print Shasta Office Park, a new development in a nearby community, has contacted Greener Lawn USA 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 225 direct labor-hours annually. Greener Lawn USA has a policy of pricing estimates at 150% of cost. 3: Requirements 1. Allocate Greener Lawn USA's costs to the activity-cost pools and determine the activity rate for each pool. 2. Estimate total cost for the Shasta Office Park job. How much would Greener Lawn USA bid to perform the job? 3. Greener Lawn USA does 31 landscape designs for its customers each year. Estimate the total cost for the Shasta Office park job if Greener Lawn USA allocated costs of the Landscape Design activity based on the number of landscape designs rather than the number of landscape design-hours. How much would Greener Lawn USA bid to perform the job? Which cost driver do you prefer for the Landscape Design activity? Why? 4. Shasta Office Park asks Greener Lawn USA to give an estimate for providing its services for a 2-year period. What are the advantages and disadvantages for Greener Lawn USA to provide a 2-year estimate? OOOO (4) O less less Cost Cost Number of orders Number of orders per design hour O per DLH per design hour per DLH per design hour more more O per DLH Total quantity of cost driver Total quantity of cost driver O per estimate O per estimate O per estimate landscape designs landscape design-hours (10) distinguishes the costs between simple and complex landscape designs. results in a more competitive bid price. simplifies the cost allocation process. (12) be locked into the same price, regardless of cost increases. have guaranteed income benefiting Greener Lawn USA's profit margin, regardless of costs. (11) O allows Greener Lawn USA to be more price competitive. causes Greener Lawn USA's costs to be higher. 00 landscape designs landscape design-hours

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