70 620 Consumption Ratios; Activity Rates Saludable Company produces two types of get-well cards: scented and regular. Drivers for the four activities are as follows: Scented Regular Cards Cards Inspection 110 70 hours Setup hours Machine hours 160 Number of 230 65 moves The following activity data has been collected: Inspecting products $4,960 Setting up equipment 4,840 Machining 6,470 Moving materials 1,310 Required: 1. Calculate the consumption ratios for the four drivers. Round your answers to two decimal places Scented Regular Cards Cards Inspection hours Setup hours Machine hours Number of moves 2. Which of the following statements indicate there is product diversity? Significant variation in the consumption ratios from driver to driver. Explain the significance of product diversity for decision making if the company chooses to use machine hours to assign all overhead. If machine hours are used as the only driver, scented cards would receive 21% of the overhead, and regular cards would receive 79% of the overhead. Yet, the cards consume well over 61% of the non-machine related overhead. Thus, the Scented cards are undercosted , and the Regular cards are overcosted . This inaccuracy can adversely affect many decisions, including pricing, keep or drop, and cost-volume-profit. 3. Calculate the activity rates that would be used to assign costs to each product. Round your answers to the nearest cent. Rates: Inspecting $ per inspection products hour Setting up per setup equipment hour per machine Machining hour Moving materials $ per move 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? If required, round your answer to nearest whole number of hours. inspection hours CA