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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
$302,600
$482,800
$29,300
$49,600
114,500
297,000
82,200
226,000
149,200
495,800
$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
Expected Use of Cost Drivers per Product
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
$
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.)
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