1. Saludable Company produces two types of get-well cards: scented and regular. Drivers for the four activities are as follows:

   	Scented Cards		Regular Cards
   Inspection hours	140		60
   Setup hours	60		20
   Machine hours	170		650
   Number of moves	235		75

   The following activity data has been collected:

   Inspecting products	$5,070
   Setting up equipment	4,810
   Machining	6,380
   Moving materials	1,420

   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.

   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,

   scentedregular

   cards would receive 21% of the overhead, and

   scentedregular

   cards would receive 79% of the overhead. Yet, the

   scentedregular

   cards consume well over 70% of the non-machine related overhead. Thus, the Scented cards are

   overcostedundercosted

   , and the Regular cards are

   overcostedundercosted

   . 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	$fill in the blank 15 per inspection hour
   Setting up equipment	$fill in the blank 16 per setup hour
   Machining	$fill in the blank 17 per machine hour
   Moving materials	$fill in the blank 18 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