Exercise 17-5 (Part Level Submission) Shady Lady sells window coverings (shades, blinds, and awnings) to both commercial and residential customers. The following information relates to its budgeted operations for the current year. Commercial Residential Revenues Direct material costs Direct labor costs Overhead costs $302,900 $482,000 $30,100 103,000 80,300 $ 50,100 301,000 149,600 500,700 213,400 Operating income (loss) $ 89,500 ($ 18,700 ) The controller, Peggy Kingman, is concerned about the residential product line. She cannot understand why this line is not more profitable given that the installations of window coverings are less complex for residential customers. In addition, the residential client base resides in close proximity 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. Here are the three activity cost pools and related information she developed: Activity Cost PoolsEstimated Overhead Scheduling and travel Setup time Supervision $108,600 64,740 56,560 Cost Drivers Hours of travel Number of setups Direct labor cost Expected Use of Cost Drivers per Product Commercial Residential Scheduling and travel Setup time 1,110 440 290