CALCULATOR PRINTER VERSION BACK NEXT Exercise 4-14 a1-a2, b (Video) 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 $316,250 $480,000 Direct materials costs $30,000 $50,000 Direct labor costs 120,000 280,000 Overhead costs 86,250 236,250 175,000 505,000 Operating income (loss) $80,000 $(25,000) 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 Overhead Cost Drivers Scheduling and travel $86,250 Hours of travel Setup time 135,000 Number of setups Supervision 40,000 Direct labor cost Estimated Use of Cost Drivers per Product Commercial Residential Scheduling and travel 750 500 Setup time 500 250 sent CALCULATOR PRINTER VERSIO Compute the activity based overhead rates for each of the three cost pools. (Round overhead rate for supervision to 2 decimal places, e.g. 0.38.) Overhead Rates Scheduling and travel $ per dollar Setup time $ per setup Supervision per dollar Determine the overhead cost assigned to each product line. Commercial Residential Scheduling and travel $ Setup time $ Supervision $ Total cost assigned $ Compute the operating income for each product line, using the activity-based overhead rates. naratinn Inrama fines cy Policy | R 2000-2020 John Wiley Sons, Inc. All Rights Reserved. A Division of John Wiley & Sons, Inc. Compute the operating income for each product line, using the activity-based overhead rates. Operating income (loss) Commercial $ Residential $ Click if you would like to Show Work for this question: Open Show Work