Consumption Ratios; Activity Rates

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

$\backslash$table$[[,$Scented Cards,Regular Cards$],[$Inspection hours,$120,80],[$Setup hours,$80,10],[$Machine hours,$210,550],[$Number of moves,$225,55]]$

The following activity data has been collected:

Inspecting products

$$5,090$

Setting up equipment

$4,840$

Machining

$6,420$

Moving materials

$1,330$

Required:

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

Inspection hours

Setup hours

Machine hours

Number of moves

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

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Inspection hours

$0\mathrm{.}4$

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 $$ cards would recelve $28\%$ of the overhead, anc $$ cards would receive $72\%$ of the overhead. Yet, the $S{C}_{?}$ cards consume well over $60\%$ of the non$-$machine related overhead. Thus, the Scented cards ar $,$ and the Regular cards are $$ : 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:

$\backslash$table$[[$Inspecting products,$$,$per inspection hour$],[$Setting up equipment,$$,$per setup hour$],[$Machining$,$$$,$per machine hour$],[$Moving materials,$$,$per move$]]$

Suppose that the budget for inspection is $$59,000$ for the coming year and that the activity rate for inspecting products is $$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. inspection hours

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