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? ===================================================