View Policies Show Attempt History Current Attempt in Progress 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 $300.000 $480,000 Direct materials costs $30,000 $50,000 Direct labor costs 100,000 300,000 Overhead costs 85,000 215.000 150,000 500.000 Operating income (loss) $85.000 $120,000) 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 Estimated Activity Cost Pools Scheduling and travel Setup time Supervision Estimated Overhead $85.000 90,000 60,000 Cost Drivers Hours of travel Number of setups Direct labor cost Estimated Use of Cost Drivers per Product Commercial Residential Scheduling and travel 500 Setup time 750 350 250 (31) Your answer is correct Compute the activity based overhead rates for each of the three cost pools Overhead Rates !! Your answer is correct. Determine the overhead cost assigned to each product line. Commercial Residential Scheduling and travel $ 51000 $ 34000 Setup time $ 52500 $ 37500 Supervision $ 15000 $ 45000 Total cost assigned $ 118500 $ 116500 e Textbook and Media Attempts: 2 of 3 used (6) 6.67/10 = e Textbook and Media Attempts: 2 of 3 used (b) 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 3 used Submit