Question

Riverside Florists uses an activity-based costing system to compute the cost of making floral bouquets and delivering the bouquets to its commercial customers. Company personnel who earn $180,000 typically perform both tasks; other firm-wide overhead is expected to total $70,000. These costs are allocated as follows:

Bouquet
Production Delivery Other
Wages and salaries 60% 30% 10%
Other overhead 50% 35% 15%
Riverside anticipates making 20,000 bouquets and 4,000 deliveries in the upcoming year.
A)The cost of wages and salaries and other overhead that would be charged to each bouquet made is closest to:
$12.50.
$7.15.
some other amount.
$8.75.
$13.75.
B)The cost of wages and salaries and other overhead that would be charged to each delivery is closest to:
$19.63.
some other amount.
$40.63.
$20.31.
$26.75.

Answer 1

Answer: See explanation

Step-by-step explanation:

A) The cost of wages and salaries and other overhead that would be charged to each bouquet made is closest to:

Total Cost will be calculated as:

= (180,000 × 60%) + (70000 × 50%)

= (180000 × 0.6) + (70000 × 0.5)

= 108000 + 35000

= 143000

Therefore, the cost of wages and the salaries and every other overheads that'll be charged to each bouquet will be:

= Total Cost/Total Bouquets

= 143000/20000

= $7.15

B) The cost of wages and salaries and other overhead that would be charged to each delivery is closest to:

Total Cost will be calculated as:

= (180,000 × 30%) + (70000 × 35%)

= (180000 × 0.3) + (70000 × 0.35)

= 54000 + 24500

= 78500

The answer will then be:

= Total Cost/Total Deliveries

= 78500/4000

= $19.63