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		Residental
Revenues		$299,500		$479,100
Direct Material cost	$29,400		$49,400
Direct Labor cost	112,500		308,500
Overhead costs	81,200	223,100	150,300	508,200
Operating income		$76,400		($29,100)

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	$103,050	Hours of travel
Setup time	65,300	Number of setups
Supervision	63,150	Direct labor cost

Expected Use of Cost Drivers per Product

	Commercial	Residential
Scheduling and travel	1,090	545
Setup time	420	270
Supervision	$112,500	$308,500

a) Compute the activity-based overhead rates for each of the three cost pools, and determine the overhead cost assigned to each product line.

b) Compute the operating income for each product line, using the activity-based overhead rates.