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 110 70 Setup hours 70 20 Machine hours 210 610 Number of moves 220 55 The following activity data has been collected: Inspecting products $5,030 Setting up equipment 4,660 Machining 6,500 Moving materials 1,440 Required: 1. Calculate the consumption ratios for the four drivers. Round your answers to two decimal places. Scented Cards Regular Cards Inspection hours Setup hours Machine hours Number of moves 2. Which of the following statements indicate there is product diversity? 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 it the company chooses to use machine hours to assign all overhead. If machine hours are used as the only driver, scented cards would receive 26% of the overhead, and regular cards would receive 74% of the overhead. Yet, the scented 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 products per inspection hour Setting up equipment per setup hour Machining per machine 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 Feedback Check My Work The consumption ratio is the percentage of time spent per product on each activity, Product 1 Consumption Ratio: Product 1 hours (activity 1) / (Product 1 hours (activity 1) + Product 2 hours (activity 1)) Determine the cost per activity by dividing the cost data per activity by the total number of hours per activity