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 Cards		Regular Cards
Inspection hours	120		100
Setup hours	100		30
Machine hours	160		650
Number of moves	215		75

The following activity data has been collected:

Inspecting products	$5,010
Setting up equipment	4,750
Machining	6,320
Moving materials	1,270

Required:

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

	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?

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 20% of the overhead, and cards would receive 80% of the overhead. Yet, the cards consume well over 55% of the non-machine related overhead. Thus, the Scented cards are , 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:
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 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. fill in the blank 19 inspection hours