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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 $298,900 $481,000 Direct materials costs $30,700 $50,000 Direct labor costs 107,700 298,500 Overhead costs 82,500 220,900 151,000 499,500 Operating income (loss) $78,000 $(18,500) 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 $87,500 Hours of travel Setup time 88,500 Number of setups Supervision 57,500 Direct labor cost Expected Use of Cost Drivers per Product Commercial Residential Scheduling and travel 800 580 Setup time 360 290

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 %

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 $ $

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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