Current Attempt in Progress Concord Creations sells window treatments.pdf

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The controller is concerned that the residential product line is not more profitable, even though installations are less complex and travel costs are lower for residential customers. She will take a closer look at the overhead costs assigned to the two product lines and develop a more accurate costing model using three activity cost pools. The controller hopes this will determine why the residential line is not more profitable.

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Current Attempt in Progress Concord 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. The controller, Peggy Kingman, is concemed about the
residential product line. She cannot understand why this line is not more proftable 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 has 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:
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 has 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:
Compute the activity-based overhead rates for each of the three cost pools. (Round answers to 2
decimal places, e.g. 0.38. ) eTextbook and Media Determine the overhead cost assigned to each
product line.
Determine the overhead cost assigned to each product lint. eTextbook and Media Compute the
operating income for each product line, using the activity-based overhead rates.
Compute the operating income for each product line, using the activity-based overhead rates,

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