Question
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 | 35,000 | 65,000 | 100,000 | |||
Machine hours | 49,000 | 301,000 | 350,000 | |||
Number of setups | 48 | 72 | 120 | |||
Testing hours | 1,200 | 8,800 | 10,000 | |||
Number of purchase orders | 520 | 3,480 | 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 | Machine hours |
Setups | fill in the blank 4 | fill in the blank 5 | Number of setups |
Inspecting products | fill in the blank 7 | fill in the blank 8 | Testing hours |
Purchasing | fill in the blank 10 | fill in the blank 11 | Purchase orders |
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? Part YK7
3. If the machine hours were used for the plantwide rate, would this remove the cost distortion of a plantwide rate? Yes
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