QUESTION 5 Activity Based Costing

BV Landscaping provides garden maintenance and landscaping services to commercial clients. It uses activity-based costing to bid on jobs and to evaluate profitability. BV Landscaping reports the following budgeted annual costs:

Carol Pinner, management accountant of BV Landscaping, has established four activity-cost pools and the following budgeted activity for each cost pool:

Pinner estimates that BV Landscaping’s costs are distributed to the activity-cost pools as follows:

Bolder Transport, a company in a nearby industrial estate, has contacted BV Landscaping to provide an estimate on landscape design and annual lawn maintenance. The job is estimated to require a single landscape design requiring 45 design hours in total and 350 direct labour-hours annually. BV Landscaping has a policy of pricing estimates at 150% of cost. 

Required

1. Allocate BV Landscaping’s costs to the activity-cost pools and determine the activitycost rate for each pool.

2. Estimate total cost for the Bolder Transport job. How much would BV Landscaping bid to perform the job?