Consumption Ratios; Activity Rates

Bienestar Company produces two types of get$-$well cards: scented and regular. Drivers for the four activities are as follows:

Line Item Description Scented Cards Regular Cards

Inspection hours $130100$

Setup hours $10020$

Machine hours $180610$

Number of moves $22575$

The following activity data has been collected:

Line Item Description Amount

Inspecting products $$4,950$

Setting up equipment $4,820$

Machining $6,460$

Moving materials $1,320$

Required:

$1.$ Calculate the consumption ratios for the four drivers. Round your answers to two decimal places.

Line Item Description Scented Cards Regular Cards

Inspection hours fill in the blank $1$

fill in the blank $2$

Setup hours fill in the blank $3$

fill in the blank $4$

Machine hours fill in the blank $5$

fill in the blank $6$

Number of moves fill in the blank $7$

fill in the blank $8$

$2.$ Which of the following statements indicate there is product diversity?

fill in the blank $1$ of $6$

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, fill in the blank $2$ of $6$

cards would receive $23\%$ of the overhead, and fill in the blank $3$ of $6$

cards would receive $77\%$ of the overhead. Yet, the fill in the blank $4$ of $6$

cards consume well over $57\%$ of the non$-$machine related overhead. Thus, the Scented cards are fill in the blank $5$ of $6$

$,$ and the Regular cards are fill in the blank $6$ of $6$

$.$ 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.

Line Item Description Activity rate

Rates:

Inspecting products $fill in the blank $15$

per inspection hour

Setting up equipment $fill in the blank $16$

per setup hour

Machining $fill in the blank $17$

per machine hour

Moving materials $fill in the blank $18$

per move

$4.$ Suppose that the budget for inspection is $$53,000$ for the coming year and that the activity rate for inspecting products is $$25$ 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.

fill in the blank $1$ of $1$

inspection hoursConsumption Ratios; Activity Rates

Bienestar Company produces two types of get$-$well cards: scented and regular. Drivers for the four activities are as follows:

The following activity data has been collected:

Calculate the consumption ratios for the four drivers. Round your answers to two decimal places.

Which of the following statements indicate there is product diversity?

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, $,$ cards would receive $23\%$ of the overhead, and

cards would receive $77\%$ of the overhead. Yet, the

cards consume well over $57\%$ of the non$-$machine related overhead. Thus, the Scented cards are

$7,$ and the Regular cards an $.$ This inaccuracy can adversely affect many decisions, including pricing, keep or drop, and cost$-$volume$-$profit.

Calculate the activity rates that would be used to assign costs to each product. Round your answers to the nearest cent.

Rates:

Inspecting products $$ per inspection hour

Setting up equipment $ per setup hour

Machining $ per machine hour

Moving materials

per move

$|$ inspection hours