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 $ 85,000 Hours of travel
Setup time |
90,000 |
Number of |
setups |
|
|
Supervision |
60,000 |
Direct labor |
cost |
|
|
Expected Use of Cost Drivers per Product Commercial
Residential
Scheduling and travel 750 500
Setup time 350 250 Instructions
a . Compute the activity-based overhead rates for each of the three cost pools , and determine the overhead cost assigned to each product line .
b . Compute the operating income for each product line , using the activity-based overhead rates .
c . What do you believe Peggy Kingman should do ? ===================================================