Exercise 17-14 Venus Creations sells window treatments (shades, blinds, and awnings) to both commercial and residential customers.

Exercise 17-14

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$300,700$483,000Direct materials costs$29,500$50,500Direct labor costs

100,400289,500Overhead costs90,900220,800150,000490,000Operating income (loss)$79,900$(7,000)

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

Estimated Overhead

Cost Drivers

Scheduling and travel$86,500Hours of travelSetup time

86,900Number of setupsSupervision67,500Direct labor cost

Expected Use of Cost Drivers per ProductCommercial

Residential

Scheduling and travel940600Setup time

350230

Your answer is partially correct. Try again.  Compute the activity-based overhead rates for each of the three cost pools. (Round answers to 2 decimal places, e.g. 12.25.)

Overhead Rates

Scheduling and travel

$

Setup time

$

Supervision

%

LINK TO TEXT

Your answer is incorrect. Try again.  Determine the overhead cost assigned to each product line. (Round answers to 0 decimal places, e.g. 1,575.)

Commercial

Residential

Scheduling and travel

$

$

Setup time

$

$

Supervision

$

$

Total cost assigned$

$

LINK TO TEXT

Your answer is incorrect. Try again.  Compute the operating income for each product line, using the activity-based overhead rates. (Round answers to 0 decimal places, e.g. 1,575.)

Operating income (loss)

Commercial$

Residential$







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