Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
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 $298,450 $497,000 Direct materials costs $35,000 $50,000 Direct labor costs 100,000 300,000 Overhead costs 88,450 223,450 177,000 527,000 Operating income (loss) $75,000 $(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 Activity Cost Pools Estimated Overhead Cost Drivers Scheduling and travel $88,450 Hours of travel Setup time 117,000 Number of setups Supervision 60,000 Direct labor cost Estimated Use of Cost Drivers per Product Commercial Residential Scheduling and travel 800 650 Setup time 400 250 Compute the activity-based overhead rates for each of the three cost pools. (Round answers to 2 decimal places, e.g. 0.38.) Overhead Rates Scheduling and travel $ per hour Setup time $ perustun 3 Supervision $ per dollar e Textbook and Media Determine the overhead cost assigned to each product line. Commercial Residential Scheduling and travel $ $ Setup time ta $ $ Supervision $ ta Total cost assigned $ ta $ $ e Textbook and Media ILU Compute the operating income for each product line, using the activity-based overhead rates. Operating income (loss) Commercial $ Residential $ e Textbook and Media

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Federal Budget Politics Policy Process

Authors: Allen Schick

3rd Edition

0815777353, 9780815777359

More Books

Students also viewed these Accounting questions

Question

=+Is this metric really applicable to what I want to accomplish?

Answered: 1 week ago

Question

=+How does this metric connect to my objectives?

Answered: 1 week ago