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Foster Florist Specializes in Large Floral Bouquets for Hotels and Other

question 98

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Foster 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:

 Overhead costs:  Wages and salaries $70,000 Other expenses 50,000 Total $120,000\begin{array}{|l|r|}\hline \text { Overhead costs: } & \\\hline \text { Wages and salaries } & \$ 70,000 \\\hline \text { Other expenses } & \underline{50,000} \\\hline \text { Total } & \$ 120,000\\\hline \end{array}

 Distribution of Resource Consumption: \text { Distribution of Resource Consumption: }

\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad  Activity Cost Pools \text { Activity Cost Pools }
 Making Bouquets  Delivery  Other  Wages and salaries 70%20%10% Other expenses 45%25%30%\begin{array}{|l|r|r|r|} \hline& \text { Making Bouquets } & \text { Delivery } & \text { Other } \\\hline \text { Wages and salaries } & 70 \% & 20 \% & 10 \% \\\hline \text { Other expenses } & 45 \% & 25 \% & 30 \% \\\hline\end{array}
The "Other" activity cost pool consists of the costs of idle capacity and organizationsustaining costs. The amount of activity for the year is as follows:


 Activity Cost Pool  Activity  Making bouquets 40,000 bouquets  Delivery 1,000 delive \begin{array}{|l|r|}\hline \text { Activity Cost Pool } & \text { Activity } \\\hline \text { Making bouquets } & 40,000 \text { bouquets } \\\hline \text { Delivery } & 1,000 \text { delive }\\\hline\end{array}
-What would be the total overhead cost per bouquet according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Making Bouquets activity cost pool?

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