Answered step by step
Verified Expert Solution
Question
1 Approved Answer
need help with the following Lily Creations sells window treatments (shades, blinds, and awnings) to both commercial and residential customers. The following information relates to
need help with the following
Lily Creations sells window treatments (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 $388,550 $562.000 Direct materials costs $30,000 $50,000 Direct labor costs 130,000 270,000 Overhead costs 143,550 303,550 262,000 582,000 Operating income (loss) $85,000 $(20,000) 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 Pools Estimated Overhead Cost Drivers Scheduling and travel $143,550 Hours of travel Setup time 102,000 Number of setups Supervision 160,000 Direct labor cost Estimated Use of Cost Drivers per Product Commercial Residential Scheduling and travel 800 650 Setup time 350 250 (a 1) Your answer is partially correct. Compute the activity-based overhead rates for each of the three cost pools. (Round answers to 2 decimal places, eg. 0.38.) Overhead Rates Scheduling and travel $ 99 per hour Setup time $ 170 per setup Supervision $ per dollar Determine the overhead cost assigned to each product line. (Round answers to 0 decimal places, e.g. 1,575.) Commercial Residential Scheduling and travel Setup time Supervision Total cost assigned (b) Compute the operating income for each product line, using the activity-based overhead rates. (Round answers to 0 decimal places, e.g. 1,575.) Operating income (loss) Commercial $ Residential $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started