Zapato Company produces two types of boots: cowboy and cowgirl. There are four activities associated with the two products. Drivers for the four activities are as follows:

Cowboy Cowgirl

Cutting hours 2,080 3,900

Assembly hours 1,500 2,250

Inspection hours 655 1,575

Rework hours 75 225

1. Calculate the consumption ratios for the four drivers. Round your answers to two decimal places.

Cowboy Cowgirl

Cutting: _________ __________

Assembling:_________ _________

Inspecting: _________ _________

Reworking:_________ _________

2. Is there evidence of product diversity?YES or NO

Explain.

The input in the box below will not be graded, but may be reviewed and considered by your instructor.

Activity Rates:

Zapato Company produces two types of boots: cowboy and cowgirl. There are four activities associated with the two products. Drivers for the four activities are as follows:

Cowboy Cowgirl

Cutting hours 2,000 3,900

Assembly hours 1,400 2,250

Inspection hours 625 1,575

Rework hours 75 225

The following activity data have been collected:

Cutting $62,000

Assembling 75,000

Inspecting 18,000

Reworking 9,000

Calculate the activity rates that would be used to assign costs to each product. If required, round your answers to the nearest cent.

Cutting: __________$ per cutting hour

Assembling: __________$ per assembling hour

Inspecting: __________$ per inspecting hour

Reworking: __________$ per reworking hour

Nonvalue-Added Costs:

Boothe Inc. has the following two activities: (1) Retesting reworked products, cost: $479,000. The retesting cost of the most efficient competitor is $150,000. (2) Welding subassemblies, cost: $803,000 (45,000 welding hours). A benchmarking study reveals that the most efficient level for Boothe would use 36,000 welding hours and entail a cost of $642,400.

Required:

Determine the nonvalue-added cost of each activity. Do not round values in intermediate calculations, but round your final answers to the nearest dollar.

Retesting Welding

Nonvalue-added cost: ____________ _______________

Velocity and Cycle Time:

Karsen Company takes 8,000 hours to produce 28,800 units of a product.

Required:

What is the velocity? Cycle time? Round your answers to two decimal places.

Velocity____________Units per hour

Cycle Time_____________hour(s)

Consumption Ratios; Activity Rates

Felicidad 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	100		100
Setup hours	100		10
Machine hours	160		630
Number of moves	215		75

The following activity data have been collected:

Inspecting products	$4,970
Setting up equipment	4,720
Machining	6,390
Moving materials	1,310

Required:

1. Calculate the consumption ratios for the four drivers. Round your answers to two decimal places.

Scented Cards Regular Cards
Inspection hours ____________ ____________
Setup hours ____________ ____________
Machine hours ____________ ____________
Number of moves ____________ ____________ 2. Conceptual Connection: Is there evidence of product diversity? Explain the significance of product diversity for decision making if the company chooses to use machine hours to assign all overhead. The input in the box below will not be graded, but may be reviewed and considered by your instructor.

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.

_______________inspection hours

Comparing ABC and Plantwide Overhead Cost Assignments

The Sabroso Chocolate Company uses activity-based costing (ABC). The controller identified two activities and their budgeted costs:

Setting up equipment	$270,000
Other overheard	$840,000

Setting up equipment is based on setup hours, and other overhead is based on oven hours. Sabroso produces two products, Fudge and Cookies. Information on each product is as follows:

Fudge		Cookies
Units produced	5,000			25,000
Setup hours	3,000			1,000
Oven hours	4,500			7,500

Required:

Round your answers to the nearest whole dollar, unless otherwise directed.

1. Calculate the activity rate for (a) setting up equipment and (b) other overhead.

a. Setting up equipment______________per setup hour

b. Other overhead ______________per oven hour

2. How much total overhead is assigned to Fudge using ABC? _______________

3. What is the unit overhead assigned to Fudge using ABC? Round to the nearest cent._______________per unit

4. Now, ignoring the ABC results, calculate the plantwide overhead rate, based on oven hours.______________ per oven hour

5. How much total overhead is assigned to Fudge using the plantwide overhead rate?________________

Activity-Based Product Costing

Suppose that a surgical ward has gathered the following information for four nursing activities and two types of patients:

Patient Category
Driver	Normal	Intensive	Activity Rate
Treating Patients	Treatments	7,400	9,000	$4.00
Providing hygienic care	Hygienic hours	5,800	17,600	$5.00
Responding to requests	Requests	32,000	80,000	$2.00
Monitoring patients	Monitoring hours	6,000	72,000	$3.00

1. Determine the total nursing costs assigned to each patient category.

Cost Assigned

Normal $_____________

Intensive $_____________

2. Output is measured in patient days. Assuming that the normal patient category uses 8,000 patient days and the intensive patient category uses 6,400 patient days, calculate the nursing cost per patient day for each type of patient. Round your answers to the nearest cent.

Normal_________ per patient day

Intensive___________ per patient day

3. Conceptual Connection: The supervisor of the surgical ward has suggested that patient days is the only driver needed to assign nursing costs to each type of patient. Calculate the charge per patient day using this approach. Round your answer to the nearest cent.

$_____________ per patient day

Zapato Company produces two types of boots: cowboy and cowgirl. There are four activities associated with the two products. Drivers for the four activities are as follows: Cowboy Cowgirl Cutting hours 2,080 3,900 Assembly hours 1,500 2,250 Inspection hours 655 1,575 Rework hours 75 225 1. Calculate the consumption ratios for the four drivers. Round your answers to two decimal places. Cowboy Cowgirl Cutting: _________ __________ Assembling:_________ _________ Inspecting: _________ _________ Reworking:_________ _________ 2. Is there evidence of product diversity?YES or NO Explain. The input in the box below will not be graded, but may be reviewed and considered by your instructor. Activity Rates: Zapato Company produces two types of boots: cowboy and cowgirl. There are four activities associated with the two products. Drivers for the four activities are as follows: Cowboy Cowgirl Cutting hours 2,000 3,900 Assembly hours 1,400 2,250 Inspection hours 625 1,575 Rework hours 75 225 The following activity data have been collected: Cutting $62,000 Assembling 75,000 Inspecting 18,000 Reworking 9,000 Calculate the activity rates that would be used to assign costs to each product. If required, round your answers to the nearest cent. Cutting: __________$ per cutting hour Assembling: __________$ per assembling hour Inspecting: __________$ per inspecting hour Reworking: __________$ per reworking hour Nonvalue-Added Costs: Boothe Inc. has the following two activities: (1) Retesting reworked products, cost: $479,000. The retesting cost of the most efficient competitor is $150,000. (2) Welding subassemblies, cost: $803,000 (45,000 welding hours). A benchmarking study reveals that the most efficient level for Boothe would use 36,000 welding hours and entail a cost of $642,400. Required: Determine the nonvalue-added cost of each activity. Do not round values in intermediate calculations, but round your final answers to the nearest dollar. Retesting Welding Nonvalue-added cost: ____________ _______________ Velocity and Cycle Time: Karsen Company takes 8,000 hours to produce 28,800 units of a product. Required: What is the velocity? Cycle time? Round your answers to two decimal places. Velocity____________Units per hour Cycle Time_____________hour(s) Consumption Ratios; Activity Rates Felicidad Company produces two types of getwell cards: scented and regular. Drivers for the four activities are as follows: Scented Cards Regular Cards Inspection hours 100 100 Setup hours 100 10 Machine hours 160 630 Number of moves 215 75 The following activity data have been collected: Inspecting products $4,970 Setting up equipment 4,720 Machining 6,390 Moving materials 1,310 Required: 1. Calculate the consumption ratios for the four drivers. Round your answers to two decimal places. Scented Cards Regular Cards Inspection hours ____________ ____________ Setup hours ____________ ____________ Machine hours ____________ ____________ Number of moves ____________ ____________ 2. Conceptual Connection: Is there evidence of product diversity? Explain the significance of product diversity for decision making if the company chooses to use machine hours to assign all overhead. The input in the box below will not be graded, but may be reviewed and considered by your instructor. 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. _______________ inspection hours Comparing ABC and Plantwide Overhead Cost Assignments The Sabroso Chocolate Company uses activitybased costing (ABC). The controller identified two activities and their budgeted costs: Setting up equipment $270,000 Other overheard $840,000 Setting up equipment is based on setup hours, and other overhead is based on oven hours. Sabroso produces two products, Fudge and Cookies. Information on each product is as follows: Fudge Cookies Units produced 5,000 25,000 Setup hours 3,000 1,000 Oven hours 4,500 7,500 Required: Round your answers to the nearest whole dollar, unless otherwise directed. 1. Calculate the activity rate for (a) setting up equipment and (b) other overhead. a. Setting up equipment______________per setup hour b. Other overhead ______________per oven hour 2. How much total overhead is assigned to Fudge using ABC? _______________ 3. What is the unit overhead assigned to Fudge using ABC? Round to the nearest cent._______________per unit 4. Now, ignoring the ABC results, calculate the plantwide overhead rate, based on oven hours.______________ per oven hour 5. How much total overhead is assigned to Fudge using the plantwide overhead rate?________________ ActivityBased Product Costing Suppose that a surgical ward has gathered the following information for four nursing activities and two types of patients: Patient Category Driver Normal Intensive Activity Rate Treating Patients Treatments 7,400 9,000 $4.00 Providing hygienic care Hygienic hours 5,800 17,600 $5.00 Responding to requests Requests 32,000 80,000 $2.00 Monitoring patients Monitoring hours 6,000 72,000 $3.00 1. Determine the total nursing costs assigned to each patient category. Cost Assigned Normal $_____________ Intensive $_____________ 2. Output is measured in patient days. Assuming that the normal patient category uses 8,000 patient days and the intensive patient category uses 6,400 patient days, calculate the nursing cost per patient day for each type of patient. Round your answers to the nearest cent. Normal_________ per patient day Intensive___________ per patient day 3. Conceptual Connection: The supervisor of the surgical ward has suggested that patient days is the only driver needed to assign nursing costs to each type of patient. Calculate the charge per patient day using this approach. Round your answer to the nearest cent. $_____________ per patient day