PRODUCT-COSTING ACCURACY, CONSUMPTION RATIOS, ACTIVITY RATES, ACTIVITY COSTING Tristar Manufacturing produces two types of battery-operated toy soldiers: infantry and special forces. The soldiers are produced by using one continuous process. Four activities have been identified: machining, setups, receiving, and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs, and the other related data are as follows:

Product Machine Hours Setups Receiving Orders Packing Orders Infantry 20,000 300 900 1,600 Special forces 20,000 100 100 800 Costs $80,000 $24,000 $18,000 $30,000 Required:

. Calculate the total overhead assigned to each product by using only machine hours to calculate a plantwide rate.

. Calculate consumption ratios for each activity.

. Calculate a rate for each activity by using the associated driver.

. Assign the overhead costs to each product by using the activity rates computed in Requirement 3.

. Comment on the difference between the assignment in Requirement 1 and the activity-based assignment.

Exercise