Equally Accurate Reduced ABC System

Silven Company has identified the following overhead activities, costs, and activity drivers for the coming year:

Activity	Expected Cost		Activity Driver	Activity Capacity
Setting up equipment	$126,000		Number of setups	150
Ordering materials	18,000		Number of orders	900
Machining	126,000		Machine hours	10,500
Receiving	30,000		Receiving hours	1,250

Silven produces two models of cell phones with the following expected activity demands:

	Model X		Model Y
Units completed	5,000		10,000
Number of setups	100		50
Number of orders	300		600
Machine hours	6,000		4,500
Receiving hours	375		875

Required:

1. Calculate the global consumption ratios for the two products. Round your answers to two decimal places.

	Global consumption ratios:
Model X
Model Y

2. Using the activity consumption ratios for number of orders and number of setups, show that the same cost assignment can be achieved using these two drivers as that of the complete, four-driver ABC system. In your calculations round amounts to two decimal places. Round your final answers to the nearest dollar.

	Model X	Model Y
Setting up equipment	$	$
Ordering materials
Total Overhead assigned	$	$