6.1. A batch-level driver is consumed by a product each and every time that a. a batch of products is produced. b. a unit is produced. c. a purchase order is issued. Use the following information for MC6.3 and MC6.4: Consider the information given on two products and their activity usage: Laser Printer Inkjet Printer Units produced 1 000 4 000 Set-up hours 800 400 Inspection hours 500 500 Machine hours 200 1 0006.3. Refer to the information above. The consumption ratios for the inspection activity for each product are a. 0.167; 0.833. b. 0.333; 0.667. c. 0.500; 0.500. d. 0.667; 0.333. e. none of these. 6.4. Refer to the information above. Suppose that machine hours are used to assign all overhead costs to the two products. Select the best answer from the following. a. Laser printers are overcosted and inkjet printers are undercosted. b. Laser printers and inkjet printers are accurately costed. c. Laser printers are undercosted and inkjet printers are overcosted. C]. Using inspection hours to assign overhead costs is the most accurate approach. e. None of the above Bienestar Company produces two types of get-well cards: scented and regular. Drivers for the four activities are as follows: Scented Cards Regular Cards Inspection hours Set-up hours Machine hours Number of moves The following activity data have been collected: Inspecting products $7 500 Setting up equipment 4 750 Machining 5 120 Moving materials 2 700 Required: 1. Calculate the consumption ratios for the four drivers. 2. Is there evidence of product diversity? Explain the significance of product diversity for decision making if the company chooses to use machine hours to assign all overhead. 3. Calculate the activity rates that would be used to assign costs to each product. 4. Suppose that the activity rate for inspecting products is $20 per inspection hour. How many hours of inspection are expected for the coming year?Ex6.16 Comparing ABC and Plant-Wide Overhead Cost Assignments LO2 The Sabroso Chocolate Company uses activity-based costing (ABC). The controller identified two activities and their budgeted costs: Setting up equipment $270 000 Other overhead $900 000 Setting up equipment is based on set-up hours, and other overhead is based on oven hours. Sabroso produces two products: Fudge and Cookies. Information on each product is as follows: Fudge Cookies Units produced 5 000 25 000 Set-up hours 4 000 1 000 Oven hours 1 000 5 000 Required:(Note: Round answers to two decimal places.) 1. Calculate the activity rate for (a) setting up equipment and (b) other overhead. 2. How much total overhead is assigned to Fudge using ABC? 3. What is the unit overhead assigned to Fudge using ABC? 4. Now, ignoring the ABC results, calculate the plant-wide overhead rate based on oven hours. 5. How much total overhead is assigned to Fudge using the plant-wide overhead rate? 6. Explain why the total overhead assigned to Fudge is different under the ABC system (i.e. using the activity rates) than under the non-ABC system (i.e. using the plant-wide rate).m Product-Costing Accuracy, Consumption Ratios, Activity Rates, Activity Costing packing. Resource drivers have been used to assign costs to each activity. The overhead activities, L01, 2 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 identied: machining, set-ups, receiving and their costs and the other related data are as follows: Product Machine Hours Set-Ups Receiving Orders Packing Orders Infantry 20 000 300 900 1 600 Special forces 20 000 100 100 800 Costs $30 000 $24 000 $18 000 $30 000 Required: 1. Calculate the total overhead assigned to each product by using only machine hours to calculate a plant-wide rate. 2. Calculate consumption ratios for each activity. (Note: Round to two significant digits.) 3. Calculate a rate for each activity by using the associated driver. 4. Assign the overhead costs to each product by using the activity rates computed in requirement 3. 5. Comment on the difference between the assignment in requirement 1 and the activity-based assignment