managerial exercize 4- WordlingsReviewViewHelpAcrobatO Tell me what ycu vant to doAaBbCcD AaBbCcDc AaBbC AaBbCc[ AaB三 .T Normal1 No Spac.Heading 1Heading 2TitleParagraph120StylesCustom Lock installs window coverings for both commercial and residential cus-tomers. The following information relates to its budgeted operations for the current vear.CommercialResidential$300,000$480,000RevenuesDirect material costsDirect labor costsOverhead costsOperating income (loss)$ 30,000100,00085 000$ 70.000300,000162,000215,000$ 85,000532 00052.000)The controller, Jane Reasoner, is concerned about the residential product line. She cannotunderstand why this line is not more profitable given that the installations of window coverings are less complex to install for residentil customers. In addition, the residential clientbase resides in close proximity to the company offce, so travel costs are not as expensive ona per client visit for residential customers. As a result, she has decided to take a closer lookat the overhead costs assignedHọ the two prodiet lines to determine whetherrate product costing model cunn be đeveloped Here are the thirce activity cost pools andresidenmore accu-related information she developedEstimated OerheadActivity Cost Pools.Scheduling and truvelSetup timeSupervision$96,00079.00072.000Cost DriversHours of travelNumber of serupsDirect labor costExpected Use of Cost Drivers per ProductResizlentialCommercialScheduling anet traetSetup time200Instructions(a) Compute the activity-based overheadirates tor each ef the three cast pools, anddetermine the overhead costassignedto hoda line(b) Compute the operating income for the cadi prbduci iline using the activity basedoverhead rates.(c) What do you believe Jane Reasoner shoudd doivity-based overhead rates1009

Activity based costing system: It is precise method of allocation of overhead to the products. Under…

Custom Lock installs window coverings for both commercial and residential cus- tomers. The following information relates to its budgeted operations for the current year. Commercial $300,000 Residential $480,000 Revenues Direct material costs Direct labor costs Overhead costs Operating income (loss) $30,000 100,000 85,000 70.000 300,000 162,000 215, 000 $85,000 532 000 (S 52,000) The controller, Jane Reasoner is concerned about the residential product line. She cannot understand why this line is not more pmfitable given that the installations of window cover ings are less complex to install for residential Ustomers. In addition, the residential client base resides in close proximity to the company offidd, so travel costs are not as expensive dn a per client visit for residential customers. As a result; she has decided to take a closer Jook at the overhead costs assigned to the two poduet lines to determine whether a more accu- rate product costing model can be đeveloped. Here are the three activity cost pools and related information she developed Activity Cost Pools Scheduling and truvel Setup time Supervision Cost Drivers Hours of travel Number of senups Dinect labor.costr Esdimated Overhead 2496000 79000 72000 Expected Use of Cost Drives per Product Commercial Residential Scheduling and trater Seiup time 200 400 1:00 Instructions (a) Compute the activity-based overneadiates tor each determine the overhead cnst assigncl ož3 odua line. (b) Compute the operating income for the sach pibduci line using the activity-based overhead rates. (c) What do you believe Jane Reasoner sbaud de the threc cost pools, and

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 14.1.2P: Budget performance report for a cost center Sneed Industries Company sells vehicle parts to...