Certainty Seedlings is a medium- sized nursery located in Western Pennsylvania. Recently, Joel Beale, the companys owner,

Question:

Certainty Seedlings is a medium- sized nursery located in Western Pennsylvania. Recently, Joel Beale, the company’s owner, completed a course in business planning and analysis. He decided he would like to try to put the costs his company incurs into cost pools to see if he can get a better idea of where he makes his profit and to see where he might need to change the way he thinks about the business. Joel decided to split his costs into five pools: lawn installations, garden installations, lawn maintenance, garden maintenance, and general overhead. Joel pays his workforce $20 per hour regardless of what job they do. The buildings used by the business cost $150,000 per year. Electricity costs $24,000 per year, and general office costs are $200,000 per year. The following table details by resource what part of the business is supported by each pool and how much each contributes.

REQUIRED:

a. Complete the grid above by transforming all of the percentages and hours into actual costs by cost pool. It will be easier if you enter the table into Excel.

b. Assign the overhead to the four main cost pools using direct labor hours as your driver.

c. Calculate the cost per driver using the drivers given.

d. Certainty Seedlings marks up its costs by 20% to provide profit for Joel. What would Joel have to charge by product line to make his 20% profit per year?

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