Shady Lady sells window coverings to both commercial and residential customers. The following information relates to its budgeted operations for the current year: Commercial Residential $ 480,000 Revenues $ 300,000 Direct material costs $ 30,000 $ 70,000 Direct labour costs 100,000 55,000 300,000 162,000 Overhead costs 185,000 $ 115,000 532,000 $(52,000 ) Operating income (loss) The controller, Susan Chan, is concerned about the residential product line. She cannot understand why this line is not more profitable 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 Estimated Overhead $ 87,920 Cost Drivers Hours of travel Set-up time Number of set-ups 78,000 51,080 Supervision Direct labour cost Estimated Use of Cost Drivers per Product Commercial Residential Scheduling and travel 930 640 Set-up time 400 200 (a) Your answer is partially correct. Calculate the activity-based overhead rates for each of the three cost pools, and determine the overhead cost assigned to each product line. (Round overhead rate for supervision to 2 decimal places, e.g. 15.25%.) Overhead rates Scheduling and travel 56 per travel hour Set-up time $ 130 per set-up Supervision 12.77 % of direct labour cost Commercial Total overhead costs applied $ LA CA 56500 Residentiai 6500