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Consumption Ratios Larsen, Inc., produces two types of electronic parts and has provided the following data: Part X12 Part YK7 Total Units produced 100,000 600,000

Consumption Ratios

Larsen, Inc., produces two types of electronic parts and has provided the following data:

Part X12 Part YK7 Total
Units produced 100,000 600,000
Direct labor hours 40,000 60,000 100,000
Machine hours 52,500 297,500 350,000
Number of setups 36 84 120
Testing hours 1,200 8,800 10,000
Number of purchase orders 400 3,600 4,000

There are four activities: machining, setting up, testing, and purchasing.

Required:

1. Calculate the activity consumption ratios for each product. Round your answers to two decimal places.

Consumption Ratios
Overhead Activity Part X12 Part YK7 Activity Driver
Machining fill in the blank 1 fill in the blank 2
Setups fill in the blank 4 fill in the blank 5
Inspecting products fill in the blank 7 fill in the blank 8
Purchasing fill in the blank 10 fill in the blank 11

2. Calculate the consumption ratios for the plantwide rate (direct labor hours). Round your answers to two decimal places.

Consumption Ratios
Overhead Activity Part X12 Part YK7
Plantwide:
Manufacturing fill in the blank 13 fill in the blank 14

Which product is undercosted?

3. If the machine hours were used for the plantwide rate, would this remove the cost distortion of a plantwide rate?

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