Exercise 4-1 (part level submission) wilkins inc. has two types

Exercise 4-5 (Part Level Submission)

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		$298,600		$477,500
Direct material costs	$29,000		$50,500
Direct labor costs	114,000		298,000
Overhead costs	81,800	224,800	149,200	497,700
Operating income (loss)		$73,800		($20,200	)

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	$106,800	Hours of travel
Setup time	74,760	Number of setups
Supervision	49,440	Direct labor cost

Expected Use of Cost Drivers per Product
	Commercial	Residential
Scheduling and travel	1,070	535
Setup time	420	300

(a)

Compute the activity-based overhead rates for each of the three cost pools. (Round the supervision overhead rate to 2 decimal places, e.g. 12% and all other answers to 2 decimal places, e.g. $12.25.)

	Overhead Rate
Scheduling and travel	$[removed]
Setup time	$[removed]
Supervision	[removed]	%

(b)

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	$[removed]	$[removed]
Setup time	$[removed]	$[removed]
Supervision	$[removed]	$[removed]
Total assigned costs	$[removed]	$[removed]

(c)

Compute the operating income for each product line, using the activity-based overhead rates. (Round answers to 0 decimal places, e.g. $2,512.)

		Commercial		Residential
Operating income		$[removed]		$[removed]

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