Venus 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 $317,500 $557,000 Direct materials costs $30,000 Direct labor costs 120,000 $50,000 280,000 Overhead costs 97,500 247,500 257,000 587,000 Operating income (loss) $70,000 $(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 Scheduling and travel Setup time Estimated Overhead Cost Drivers $97,500 Hours of travel 117,000 Number of setups Supervision 140,000 Direct labor cost Estimated Use of Cost Drivers per Product Commercial Residential Scheduling and travel 750 750 Setup time 400 250 Your answer is correct. Compute the activity-based overhead rates for each of the three cost pools. Overhead Rates Scheduling and travel $ 65 per hour Setup time 180 per setup Supervision 35 % Determine the overhead cost assigned to each product line. Scheduling and travel Setup time Supervision Total cost assigned eTextbook and Media Commercial 48750 72000 Residential 4875 45000 4200000 9800000 4320750 9849857 * Your answer is incorrect. Compute the operating income for each product line, using the activity-based overhead rates. Operating income (loss) Commercial $ 3853250 Residential $ 8962857 Assistance Used