Homework Help is Here – Start Your Trial Now!
Business
Accounting
Sunland 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 Revenues $336,250 Residential $450,000 Direct materials costs $30,000 $50,000 Direct labor costs 120,000 280,000 Overhead costs 86,250 236,250 175,000 Operating income (loss) $100,000 505,000 $(55,000) 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: Cost Drivers Activity Cost Pools Scheduling and travel Setup time Supervision Estimated Overhead $86,250 135,000 40,000 Estimated Use of Cost Drivers per Product Scheduling and travel Setup time Commercial 750 500 Hours of travel Number of setups Direct labor cost Residential 500 250 Compute the activity-based overhead rates for each of the three cost pools. (Round answers to 2 decimal places, e.g. 0.38.) Scheduling and travel Setup time Supervision $ Overhead Rates per hour per setup per dollar Determine the overhead cost assigned to each product line. Scheduling and travel $ Setup time $ Supervision $ Total cost assigned eTextbook and Media Commercial $ $ $ $ $ Residential

Sunland 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 Revenues $336,250 Residential $450,000 Direct materials costs $30,000 $50,000 Direct labor costs 120,000 280,000 Overhead costs 86,250 236,250 175,000 Operating income (loss) $100,000 505,000 $(55,000) 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: Cost Drivers Activity Cost Pools Scheduling and travel Setup time Supervision Estimated Overhead $86,250 135,000 40,000 Estimated Use of Cost Drivers per Product Scheduling and travel Setup time Commercial 750 500 Hours of travel Number of setups Direct labor cost Residential 500 250 Compute the activity-based overhead rates for each of the three cost pools. (Round answers to 2 decimal places, e.g. 0.38.) Scheduling and travel Setup time Supervision $ Overhead Rates per hour per setup per dollar Determine the overhead cost assigned to each product line. Scheduling and travel $ Setup time $ Supervision $ Total cost assigned eTextbook and Media Commercial $ $ $ $ $ Residential

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
None
Sunland 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 Revenues $336,250 Residential $450,000 Direct materials costs $30,000 $50,000 Direct labor costs 120,000 280,000 Overhead costs 86,250 236,250 175,000 Operating income (loss) $100,000 505,000 $(55,000) 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: Cost Drivers Activity Cost Pools Scheduling and travel Setup time Supervision Estimated Overhead $86,250 135,000 40,000 Estimated Use of Cost Drivers per Product Scheduling and travel Setup time Commercial 750 500 Hours of travel Number of setups Direct labor cost Residential 500 250 Compute the activity-based overhead rates for each of the three cost pools. (Round answers to 2 decimal places, e.g. 0.38.) Scheduling and travel Setup time Supervision $ Overhead Rates per hour per setup per dollar Determine the overhead cost assigned to each product line. Commercial Scheduling and travel $ Setup time $ Supervision $ $ $ $ Total cost assigned $ $ eTextbook and Media Residential Compute the operating income for each product line, using the activity-based overhead rates. Commercial $ Residential $ Operating income (loss)
Transcribed Image Text:Sunland 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 Revenues $336,250 Residential $450,000 Direct materials costs $30,000 $50,000 Direct labor costs 120,000 280,000 Overhead costs 86,250 236,250 175,000 Operating income (loss) $100,000 505,000 $(55,000) 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: Cost Drivers Activity Cost Pools Scheduling and travel Setup time Supervision Estimated Overhead $86,250 135,000 40,000 Estimated Use of Cost Drivers per Product Scheduling and travel Setup time Commercial 750 500 Hours of travel Number of setups Direct labor cost Residential 500 250 Compute the activity-based overhead rates for each of the three cost pools. (Round answers to 2 decimal places, e.g. 0.38.) Scheduling and travel Setup time Supervision $ Overhead Rates per hour per setup per dollar Determine the overhead cost assigned to each product line. Commercial Scheduling and travel $ Setup time $ Supervision $ $ $ $ Total cost assigned $ $ eTextbook and Media Residential Compute the operating income for each product line, using the activity-based overhead rates. Commercial $ Residential $ Operating income (loss)
Expert Solution
steps

Step by step

Solved in 4 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Decision to Sell before or after additional processing
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS