Sunland Creations sells window treatments (shades, blinds, and awnings) to both commercial and residential customers. The...

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Sunland 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 Revenues $336,250 Residential $450,000 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) $100,000 $(55,000) 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 Supervision Estimated Overhead $86,250 135,000 40,000 Estimated Use of Cost Drivers per Product Scheduling and travel Setup time Commercial 750 500 Cost Drivers Hours of travel Number of setups Direct labor cost Residential 500 250 Compute the activity-based overhead rates for each of the three cost pools. (Round answers to 2 decimal places, e.g. 0.38.) Scheduling and travel $ Setup time $ Supervision $ Overhead Rates per hour per setup per dollar Determine the overhead cost assigned to each product line. Scheduling and travel $ Setup time $ Supervision $ Total cost assigned eTextbook and Media Commercial $ $ $ $ $ Residential Compute the operating income for each product line, using the activity-based overhead rates. Commercial $ Residential $ Operating income (loss) Sunland 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 Revenues $336,250 Residential $450,000 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) $100,000 $(55,000) 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 Supervision Estimated Overhead $86,250 135,000 40,000 Estimated Use of Cost Drivers per Product Scheduling and travel Setup time Commercial 750 500 Cost Drivers Hours of travel Number of setups Direct labor cost Residential 500 250 Compute the activity-based overhead rates for each of the three cost pools. (Round answers to 2 decimal places, e.g. 0.38.) Scheduling and travel $ Setup time $ Supervision $ Overhead Rates per hour per setup per dollar Determine the overhead cost assigned to each product line. Scheduling and travel $ Setup time $ Supervision $ Total cost assigned eTextbook and Media Commercial $ $ $ $ $ Residential Compute the operating income for each product line, using the activity-based overhead rates. Commercial $ Residential $ Operating income (loss)