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Will give a like if correct Venus Creations selle window treatments (shades, blinds, and awnings) to both commercial and residential customers. The following Information relates
Will give a like if correct
Venus Creations selle 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 (los) Commercial $352,500 $45.000 130,000 112,500 287,500 $65,000 Residential $500,000 $50.000 270,000 200,000 520,000 $120,000 The controller, Possy 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 dient 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 Overhead Activity Cost Pools Scheduling and travel Setup time Cost Drivers Hours of travel $112.500 120,000 Number of setups Supervision 80.000 Direct labor cost Estimated Use of Cost Drivers per Product Commercial Residential Scheduling and travel 700 550 Setup time 500 250 Compute the activity-based overhead rates for each of the three cost pools. Overhead Rates Scheduling and travel S per hour Setup time per setup Supervision Determine the overhead cost, assigned to each product line Commercial Residential Scheduling and travel $ Setup time $ Supervision $ $ Total cost assigned e Textbook and Media Compute the operating income for each product line, using the activity-based overhead rates. Operating income (lass) Commercial S Residential S Step by Step Solution
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