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: Setting up equipment $ 5,000 Machining 19,000 The controller has collected the expected annual prime costs for each briefcase, the machine hours, the setup hours, and the expected production. Elegant Fina Direct labor $9,000 $3,000 Direct materials $3,000 $3,000 Units 3,000 3,000 Machine hours 500 4,500 Setup hours 100 100 Required: 1. Conceptual Connection: Do you think that the direct labor costs and direct materials costs are accurately traced to each briefcase? Explain. Yes. Because direct materials and direct labor are directly traceable to each product, their cost assignment should be accurate. 2. Calculate the consumption ratios for each activity. Round your answers to one decimal place. Elegant Fina Machining 0.1 0.9 Setups 0.5 0.5 3a. 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.) Elegant S 6.3 X per briefcase 2.1 X per briefcase Fina S 3b. 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. Elegant S 3.5 X per unit Fina 4.8 x per unit Feedback Check My Work 1. Consider the three methods of assigning costs: direct tracing, driver tracing, and allocation. 2. Identify the activity driver for each activity and divide the amount of driver used for each product by the total driver quantity. 3. Allocate total overhead costs based on direct labor costs and divide by the number of units produced. 4. Allocate total overhead costs using ABC and divide by the number of units produced