.11 T-Mobile 27% 9:41 AM edugen.wileyplus.com ACC 112 Managerial Accounting 307

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.11 T-Mobile 27% 9:41 AM edugen.wileyplus.com ACC 112 Managerial Accounting 307 00 Carman:ACC 112 Managerial Accounting 307 00 Carman 172 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 530/ ncome os 20,000 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 Cest Poels Number of Your answer is correct. Compute the activity-based overhead rates for each of the three cost pools. (Round answers to 2 decimal places, e.g. 12.25.) Scheduing and travel Your answer is correct. Determine the overhead cost assigned to each product line. (Round answers to 0 decimal places, e.g. 1,575.) Sceduling and travel 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.)

Explanation / Answer

Ans)

a) Computation of activity based overhead rates for each of the three cost pools

Calculation of overhead cost assigned to each product line

C) Computation of operating income

Activity cost pools Estimated overhead(a) Expected uswe of cost drivers (b) Activity based overhead rate (a) / (b) Scheduling and travel 85000 1250 68 Setup time 90,000 600 150 Supervision 60,000 400,000 (100,000 + 300,000) 0.15

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