what would be the overall activity rate for the deliveries activity cost pool?
Foro 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
$ 80,000
Other expenses
40,000
Total
$120,000
Distribution of resource consumption:
Activity Cost Pools
Making Bouquets
Delivery
Other
Total
Wages and salaries
50%
40%
10%
100%
Other expenses
60%
10%
30%
100%
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:
Activity Cost Pool
Activity
Making bouquets
20,000 bouquets
Delivery
6,000 deliveries
What would be the total overhead cost per delivery according to the activity based costing system? In other words, what would be the overall activity rate for the deliveries activity cost pool? (Round to the nearest whole cent.)
A) $8.00
B) $5.00
C) $6.00
D) $2.00