Scenario IV: Goodmark Company produces two types of birthday cards: scented and regular. Expected product data for the coming year are given below. Overhead costs are identified by activity.

	Scented Cards	Regular Cards	Total
Units produced	20,000	200,000	-
Prime costs	$160,000	$1,500,000	$1,660,000
Direct labor hours	20,000	160,000	180,000
Number of setups	60	40	100
Machine hours	10,000	80,000	90,000
Inspection hours	2,000	16,000	18,000
Number of moves	180	120	300

Overhead costs:

Setting up equipment	$240,000
Moving materials	120,000
Machining	200,000
Inspecting products	160,000

Required:

1.

Answer the following questions:

a.

Calculate the activity consumption ratios for Scented cards (round to two decimal places).

Setups:
Moving materials:
Machining:
Inspection:

b.

If only one rate based on direct labor hours were used to assign overhead, Scented Cards would receive about percent of the total overhead. Upon comparing this overhead assignment with the activity consumption ratios calculated in part a, it is clear that a plantwide rate would significantly understate the activity-based cost assignments.

2.

Calculate the four activity rates (round to the nearest cent).

Setups:		per setup
Moving materials:		per move
Machining:		per machine hour
Inspection:		per inspection hour

3.

Calculate the total unit costs using activity rates to assign overhead (round to the nearest cent).

Scented:	$
Regular:	$

only answer number 3

Scenario III: Goodmark Company produces two types of birthday cards: scented and regular. During the year, 20,000 scented cards and 200,000 regular cards were produced. Goodmark has two production departments: Cutting and Printing. Direct labor hours are used to assign the overhead of Cutting and machine hours are used for Printing. The data for the two producing departments are given below:

	Cutting		Printing		Total
Direct labor hours:
Scented	10,000		10,000		20,000
Regular	150,000		10,000		160,000
Total	160,000		20,000		180,000
Machine hours:
Scented	2,000		8,000		10,000
Regular	8,000		72,000		80,000
	10,000		80,000		90,000
Overhead costs	$216,000		$504,000		$720,000

Required:

1.

Calculate the overhead rates for each department (round to the nearest cent):

Cutting:	$	per direct labor hour
Printing:	$	per machine hour

2.

Calculate the overhead cost per unit (round to the nearest cent):

Scented:	$
Regular:	$

Only answer number 2