Swifty 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 $315,000 $404,000 Direct materials costs $30,000 $50,000 Direct labor costs 150,000 250,000 Overhead costs 75,000 255,000 124,000 424,000 Operating income (loss) $60,000 $(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 Scheduling and travel Setup time Estimated Overhead Cost Drivers $75,000 84,000 Hours of travel Number of setups Supervision 40,000 Direct labor cost Compute the operating income for each product line, using the activity-based overhead rates. Commercial $ Residential $ Operating income (loss)