Weygandt, Financial & Managerial Accounting, 2e PRINTER VERSTON RCES Exercise Ex

Question

Weygandt, Financial & Managerial Accounting, 2e PRINTER VERSTON RCES Exercise Exercise 18-14 (Part Level Submission) relates to its budgeted operations for the current year Direct materials costs $30,000 Venus Creations sells window treatments (shades, blinds, ane awnings) to both commercial and residential customers. The following information 368, 550 $562,000 $50,000 270,000 Direct lebor costs Overhead costs Operating income (loss 130,000 143,550 303,550 262,000 582,000 20,000 The controiler, Peggy kingman, is concerned about the residential product ine. She cannat understand why this tine is not more proftable given Shedythat the instaliations of window coverings are less complex for retidential customers In addition, the residential cient base resides in close proximity to the company office, so travel costs are not as expensive takke a Seveloped. Here are the three activity cost poois and related infarmation she develspe on a per dient visit for residential customers. As a resuit, she has decided to look at the overhead costs assigned to the two product ines to determine whether a more accurabe preduct costing macel can be Activity Cost Poole Scheduling and travel Setup time Cost Drivers overhead $143,550 Houts of travel 02,000 Number of setups 160,000Direct fabor cost of Cost D Scheduing and traver Setup time (al) Your enswer is correct

Explanation / Answer

commercial Residential Revenue 368550 562000 less: Direct material cost 30000 50000 Direct labor cost 130000 270000 overhead scheduling and travel 79200 64350 setup 59500 42500 supervision 52000 108000 Total cost 350700 534850 operating income [Revenue-total cost[] 17850 27150

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