Crane sells window coverings to both commercial and residential customers. The following information relates to its budgeted operations for the current year, Commercial Residential Revenues $ 300.000 $ 480,000 Direct material costs $ 30,000 $ 70,000 Direct labour costs 100.000 300,000 Overhead costs 55.000 185.000 162,000 532,000 Operating income (los) $115.000 $(52.000) The controller, Karen White, is concerned about the residential product line. She cannot understand why this line is not more prohtable given that window coverings are less complex to install for residential customers. In addition, the residential client base resides close to the company office, so travel costs are not as expensive on a per-client visit for residential customers. As a result she has decided to take a closer look at the overhead costs assigned to the two product lines to determine whether a more accurate product costing model can be developed. Following are the three activity cost pools and related information she developed Activity Cost Pools Estimated Overhead Cost Drivers Scheduling and travel 5 93.520 Hours of travel 0/5 INT The controller, Karen White, is concerned about the residential product line. She cannot understand why this line is not more prontable given that window coverings are less complex to install for residential customers. In addition the residential client base resides close to the company office, so travel costs are not as expensive on a per client visit for residential customers. As a result, she has decided to take a closer look at the overhead costs assigned to the two product lines to determine whether a more accurate product costing model can be developed. Following are the three activity cost pools and related information she developed Activity Cost Pools Scheduling and travel Set-up time Estimated Overhead $93.520 Cost Drivers 73.200 Hours of travel Number of set-ups Direct labour cost Supervision 50.280 Ute of Cost Drivers per Product Commercial Residential Scheduling and travel Set up time 1,000 670 350 250 (b) Calculate the operating income for each product line using the activity-based overhead rates. (Enter negative amounts using a negative sign preceding the number eg. -45. Round anstvers to O decimal places, eg. 1,525.) Commercial Residential Operating income (loss) $ e Textbook and Media Save for Later Attempts: unlimited Submit Answer Question 2 of 5 2.5/5 The controller, Karen White, is concerned about the residential product line. She cannot understand why this line is not more prontable given that window coverings are less complex to install for residential customers. In addition, the residential client base resides close to the company office, so travel costs are not as expensive on a per-client visit for residential customers. As a result, she has decided to take a closer look at the overhead costs assigned to the two product lines to determine whether a more accurate product costing model can be developed. Following are the three activity cost pools and related information she developed Activity Cost Pools Estimated Overhead Cost Drivers Scheduling and travel $93.520 Hours of travel Set-up time 73,200 Number of set-ups Supervision 50.280 Direct labour cost Use of Cost Drivers per Product Commercial Residential Scheduling and travel 1.000 670 Set-up time 350 250
