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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

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

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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managerial exercize 4- Word lings Review View Help Acrobat O Tell me what ycu vant to do AaBbCcD AaBbCcDc AaBbC AaBbCc[ AaB 三 . T Normal 1 No Spac. Heading 1 Heading 2 Title Paragraph 120 Styles Custom Lock installs window coverings for both commercial and residential cus- tomers. The following information relates to its budgeted operations for the current vear. Commercial Residential $300,000 $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 52.000) The controller, Jane Reasoner, is concerned about the residential product line. She cannot understand why this line is not more profitable given that the installations of window cover ings are less complex to install for residentil customers. In addition, the residential client base resides in close proximity to the company offce, 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 assignedHọ the two prodiet lines to determine whether rate product costing model cunn be đeveloped Here are the thirce activity cost pools and residen more accu- related information she developed Estimated Oerhead Activity Cost Pools. Scheduling and truvel Setup time Supervision $96,000 79.000 72.000 Cost Drivers Hours of travel Number of serups Direct labor cost Expected Use of Cost Drivers per Product Resizlential Commercial Scheduling anet traet Setup time 200 Instructions (a) Compute the activity-based overheadirates tor each ef the three cast pools, and determine the overhead costassignedto hoda line (b) Compute the operating income for the cadi prbduci iline using the activity based overhead rates. (c) What do you believe Jane Reasoner shoudd do ivity-based overhead rates 1009
Transcribed Image Text:managerial exercize 4- Word lings Review View Help Acrobat O Tell me what ycu vant to do AaBbCcD AaBbCcDc AaBbC AaBbCc[ AaB 三 . T Normal 1 No Spac. Heading 1 Heading 2 Title Paragraph 120 Styles Custom Lock installs window coverings for both commercial and residential cus- tomers. The following information relates to its budgeted operations for the current vear. Commercial Residential $300,000 $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 52.000) The controller, Jane Reasoner, is concerned about the residential product line. She cannot understand why this line is not more profitable given that the installations of window cover ings are less complex to install for residentil customers. In addition, the residential client base resides in close proximity to the company offce, 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 assignedHọ the two prodiet lines to determine whether rate product costing model cunn be đeveloped Here are the thirce activity cost pools and residen more accu- related information she developed Estimated Oerhead Activity Cost Pools. Scheduling and truvel Setup time Supervision $96,000 79.000 72.000 Cost Drivers Hours of travel Number of serups Direct labor cost Expected Use of Cost Drivers per Product Resizlential Commercial Scheduling anet traet Setup time 200 Instructions (a) Compute the activity-based overheadirates tor each ef the three cast pools, and determine the overhead costassignedto hoda line (b) Compute the operating income for the cadi prbduci iline using the activity based overhead rates. (c) What do you believe Jane Reasoner shoudd do ivity-based overhead rates 1009
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