Vaughn 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 $342,500 $500,500 Direct materials costs $35,000 $50,000 Direct labor costs 120,000 280,000 Overhead costs 87,500 242,500 232,500 562,500 Operating income (loss) $100,000 $(62,000) 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 Estimated Overhead Cost Drivers $87,500 Hours of travel Setup time 112,500 Number of setups Supervision 120,000 Direct labor cost Estimated Use of Cost Drivers per Product Commercial Residential Scheduling and travel 750 500 Setup time 500 250 Compute the activity-based overhead rates for each of the three cost pools. (Round answers to 2 decimal places, e.g. 0.38.) Scheduling and travel Setup time Supervision +A Overhead Rates per hour per setup per dollar Determine the overhead cost assigned to each product line. Commercial Scheduling and travel $ Setup time Supervision SA $ Total cost assigned $ SA SA Residential SA tA +A $ Compute the operating income for each product line, using the activity-based overhead rates. Operating income (loss) SA Commercial $ Residential $