Product$-$Costing Accuracy, Consumption Ratios

Plata Company produces two products: a mostly handcrafted soft leather briefcase sold under the label Maletin Elegant and a leather briefcase produced largely through automation and sold under the label Maletin Fina. The two products use two overhead activities, with the following costs:

Line Item Description Amount

Setting up equipment $ $3,000$

Machining $21,000$

The controller has collected the expected annual prime costs for each briefcase, the machine hours, the setup hours, and the expected production.

Line Item Description Elegant Fina

Direct labor $$9,000$ $$3,000$

Direct materials $$3,000$ $$3,000$

Units $3,0003,000$

Machine hours $5004,500$

Setup hours $100100$

Required:

$1.$ Conceptual Connection: Do you think that the direct labor costs and direct materials costs are accurately traced to each briefcase? Explain.

$2.$ Calculate the consumption ratios for each activity. Round your answers to one decimal place.

Line Item Description Elegant Fina

Machining fill in the blank $2$

fill in the blank $3$

Setups fill in the blank $4$

fill in the blank $5$

$3$a$.$ Calculate the overhead cost per unit for each briefcase by using a plantwide rate based on direct labor costs. Round to the nearest cent. $($Note: Do not round intermediate calculations.$)$

Line Item Description Overhead cost

Elegant $fill in the blank $6$

per briefcase

Fina $fill in the blank $7$

per briefcase

$3$b$.$ Based on your calculations above which of the following statements is correct?

$4.$ Conceptual Connection: Calculate the overhead cost per unit for each briefcase by using overhead rates based on machine hours and setup hours. Round your answers to the nearest cent.

Line Item Description Overhead cost

Elegant $fill in the blank $9$

per unit

Fina $fill in the blank $10$

per unit