four activities are as follows:

	Scented Cards		Regular Cards
Inspection hours	120		100
Setup hours	100		10
Machine hours	200		610
Number of moves	220		55

The following activity data has been collected:

Inspecting products	$4,920
Setting up equipment	4,730
Machining	6,440
Moving materials	1,260

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?

Significant variation in the consumption ratios from driver to driver.Least variation in the consumption ratios from driver to driver.Significant variation in the activities involved in production.Least variation in the activities involved in production.Significant variation in the consumption ratios from driver to driver.

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,

scentedregularscented

cards would receive 25% of the overhead, and

scentedregularregular

cards would receive 75% of the overhead. Yet, the

scentedregularscented

cards consume well over 55% of the non-machine related overhead. Thus, the Scented cards are

overcostedundercostedundercosted

, and the Regular cards are

overcostedundercostedovercosted

. 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. fill in the blank 19 inspection hours