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Swifty 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 $315,000 Residential $404,000 Revenues $30,000 $50,000 150,000 250,000 Direct materials costs Direct labor costs Overhead costs Operating income (loss) 75,000 255,000 124,000 424,000 $60,000 $(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 ona 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 $75,000 Hours of travel Setup time Number of setups Supervision 40,000 Direct labor cost 84.000 Estimated Use of Cost Drivers per Product Commercial Residential Scheduling and travel 700 550 Setup time 350 250 Your answer is incorrect. Compute the activity-based overhead rates for each of the three cost pools. (Round overhead rate for supervision to 2 decimal places, 28.038) Overhead Rates Scheduling and travel $ per hour Setup time $ per setup Supervision $ per dollar Compute the operating income for each product line, using the activity-based overhead rates. Operating income (loss) Commercial 29000 Residential $

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