Commercial Residential Revenues $288,000 $484,000 Direct materials costs $30,000 $50,000 Direct labor costs 120,000 280,000 Overhead costs 78,000 228,000 184,000 514,000 Operating income (loss) $60,000 $(30,000) 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 $78,000 Hours of travel Setup time 84,000 Number of setups Supervision 100,000 Direct labor cost Estimated Use of Cost Drivers per Product Commercial Residential Scheduling and travel 700 600 Setup time 350 250 (a1) Your answer is correct. Compute the activity-based overhead rates for each of the three cost pools. (Round overhead rate for supervision to 2 decimal places, eg 0.38.) Overhead Rates Scheduling and travel $ 60 per hour Setup time $ 140 per setup Supervision $ 0.25 per dollar (a2) eTextbook and Media Your answer is correct. Determine the overhead cost assigned to each product line. (b) Scheduling and travel $ Setup time Supervision Commercial 42000 $ Residential 36000 $ 49000 $ 35000 $ $ 30000 70000 Total cost assigned S 121000 $ 141000 eTextbook and Media * Your answer is incorrect. Compute the operating income for each product line, using the activity-based overhead rates. Operating income (loss) Commercial $ Residential $ eTextbook and Media Save for Later 60000 Attempts: 1 of 3 used Attempts: 1 of 3 used Attempts: 1 of 3 used Submit Answer