NEX Exercise 17-14 (Part Level Submission) Venus Creations sells window treatmen

Question

NEX Exercise 17-14 (Part Level Submission) Venus 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 Residential Revenues $298,900 $481,000 Direct materials costs Direct labor costs Overhead costs $30,700 107,700 $50,000 298,500 82,500 220,900 151,000 499,500 $(18,500) Operating income (loss) $78,000 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 ha 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: Estimated Activity Cost Pools Cost Drivers $87,500Hours of travel Scheduling and travel Setup time Supervision 88,500Number of setups 57,500 Direct labor cost Commercial Residential 800 580 Scheduling and travel Setup time 360 290

Explanation / Answer

Determine total overhead cost assigned :

Commercial Residential Scheduling and travel 50720 36772 Setup time 49014 39484 Supervision 15240 42238 Total overhead cost assigned 114974 118494

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