# What would be the total overhead cost per bouquet according to the activity based costing system? 1 answer below »

Fornia 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:

Wages and salaries

\$ 70,000

Other expenses

60,000

Total

\$130,000

Distribution of resource consumption:

Activity Cost Pools

Making

Bouquets

Delivery

Other

Total

Wages and salaries

70%

20%

10%

100%

Other expenses

45%

25%

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

40,000 bouquets

Delivery

4,000 deliveries

What would be the total overhead cost per bouquet according to the activity based costing system? In other words, what would be the overall activity rate for the making bouquets activity cost pool? (Round to the nearest whole cent.)

A) \$1.46

B) \$1.90

C) \$1.87

D) \$2.28