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. Revenues Direct materials costs Direct labor costs Overhead costs Operating income (loss) Commercial $306,800 $40,000 110,000 86,800 236,800 $70,000 Residential S485,000 $50,000 290,000 165,000 505,000 $120,000) The controller, Pessy 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 Supervision Estimated Overhead 586,800 105,000 60.000 Cost Drivers Hours of travel Number of setups Direct labor cost V Qu Estimated Use of Cost Drivers per Product Commercial Residential BO JE & 7 4 25 6 00 9 W E R. T Y U D F G H J z V B N M Compute the activity-based overhead rates for each of the three cost pools. Overhead Rates Scheduling and travel $ Setup time Supervision per hour $ per setup %% eTextbook and Media Determine the overhead cost assigned to each product line. Commercial Residential $ $ Scheduling and travel Setup time $ $ Supervision $ $ Total cost assigned $ $ 20 esc 888 14 90 $ % & 7 3 4 5 6 8 w . R T T Y EA 8 D F G H J Compute the operating income for each product line, using the activity-based overhead rates. Operating income (loss) $ Commercial Residential $ e Textbook and Media Save for Later Attempts: 0 of 1 used Submit A MacBook Pro so 888 & # 3 % 5 4 6 7 8 Q w E R T Y S D F G H 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. Revenues Direct materials costs Direct labor costs Overhead costs Operating income (loss) Commercial $306,800 $40,000 110,000 86,800 236,800 $70,000 Residential S485,000 $50,000 290,000 165,000 505,000 $120,000) The controller, Pessy 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 Supervision Estimated Overhead 586,800 105,000 60.000 Cost Drivers Hours of travel Number of setups Direct labor cost V Qu Estimated Use of Cost Drivers per Product Commercial Residential BO JE & 7 4 25 6 00 9 W E R. T Y U D F G H J z V B N M Compute the activity-based overhead rates for each of the three cost pools. Overhead Rates Scheduling and travel $ Setup time Supervision per hour $ per setup %% eTextbook and Media Determine the overhead cost assigned to each product line. Commercial Residential $ $ Scheduling and travel Setup time $ $ Supervision $ $ Total cost assigned $ $ 20 esc 888 14 90 $ % & 7 3 4 5 6 8 w . R T T Y EA 8 D F G H J Compute the operating income for each product line, using the activity-based overhead rates. Operating income (loss) $ Commercial Residential $ e Textbook and Media Save for Later Attempts: 0 of 1 used Submit A MacBook Pro so 888 & # 3 % 5 4 6 7 8 Q w E R T Y S D F G H
