Discuss the overhead cost assigned to each product line

Question

Shady Lady sells window coverings (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				$302,600				$482,800
Direct material costs		$29,300				$49,600
Direct labor costs		114,500				297,000
Overhead costs		82,200		226,000		149,200		495,800
Operating income (loss)				$76,600				($13,000	)

 

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		$106,950		Hours of travel
Setup time		50,380		Number of setups
Supervision		74,070		Direct labor cost

Expected Use of Cost Drivers per Product
		Commercial		Residential
Scheduling and travel		1,010		505
Setup time		450		230

Compute the activity-based overhead rates for each of the three cost pools. (Round answers to 2 decimal places, e.g. $12.25.)

		Overhead Rate
Scheduling and travel		$
Setup time		$
Supervision		$

Determine the overhead cost assigned to each product line. (Round Overhead Rate to 2 decimal places, 15.25 and final answers to 0 decimal places, e.g. $2,512.)

		Commercial		Residential
Scheduling and travel		$		$
Setup time		$		$
Supervision		$		$
Total assigned costs		$		$