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Consumption Ratios Larsen, Inc., produces two types of electronic parts and has provided the following data: Part X12 Part YK7 Overhead Activity Units produced Direct labor hours Machine hours Number of setups Testing hours 8,800 Number of purchase orders 3,400 There are four activities: machining, setting up, testing, and purchasing. Required: 1. Calculate the activity consumption ratios for each product. Round your answers to two decimal places. Consumption Ratios Machining Setups Inspecting products Purchasing Part X12 Overhead Activity 100,000 35,000 52,500 Plantwide: Manufacturing Which product is undercosted? 48 1,200 600 Part YK7 DN 600,000 65,000 297,500 Part X12 Total 72 100,000 350,000 2. Calculate the consumption ratios for the plantwide rate (direct labor hours). Round your answers to two decimal places. Consumption Ratios Activity Driver 120 10,000 4,000 Part YK7 3. If the machine hours were used for the plantwide rate, would this remove the cost distortion of a plantwide rate?

Consumption Ratios Larsen, Inc., produces two types of electronic parts and has provided the following data: Part X12 Part YK7 Overhead Activity Units produced Direct labor hours Machine hours Number of setups Testing hours 8,800 Number of purchase orders 3,400 There are four activities: machining, setting up, testing, and purchasing. Required: 1. Calculate the activity consumption ratios for each product. Round your answers to two decimal places. Consumption Ratios Machining Setups Inspecting products Purchasing Part X12 Overhead Activity 100,000 35,000 52,500 Plantwide: Manufacturing Which product is undercosted? 48 1,200 600 Part YK7 DN 600,000 65,000 297,500 Part X12 Total 72 100,000 350,000 2. Calculate the consumption ratios for the plantwide rate (direct labor hours). Round your answers to two decimal places. Consumption Ratios Activity Driver 120 10,000 4,000 Part YK7 3. If the machine hours were used for the plantwide rate, would this remove the cost distortion of a plantwide rate?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Consumption Ratios Larsen, Inc., produces two types of electronic parts and has provided the following data: Part X12 Part YK7 Total Units produced Direct labor hours Machine hours Number of setups Testing hours Number of purchase orders There are four activities: machining, setting up, testing, and purchasing. Required: Overhead Activity Machining Setups Inspecting products Purchasing Overhead Activity Part X12 Plantwide: Manufacturing 100,000 35,000 52,500 48 Which product is undercosted? 1,200 600 1. Calculate the activity consumption ratios for each product. Round your answers to two decimal places. Consumption Ratios 600,000 65,000 297,500 Part YK7 72 Part X12 8,800 3,400 100,000 350,000 2. Calculate the consumption ratios for the plantwide rate (direct labor hours). Round your answers to two decimal places. Consumption Ratios 120 10,000 4,000 Activity Driver Part YK7 3. If the machine hours were used for the plantwide rate, would this remove the cost distortion of a plantwide rate?
Transcribed Image Text:Consumption Ratios Larsen, Inc., produces two types of electronic parts and has provided the following data: Part X12 Part YK7 Total Units produced Direct labor hours Machine hours Number of setups Testing hours Number of purchase orders There are four activities: machining, setting up, testing, and purchasing. Required: Overhead Activity Machining Setups Inspecting products Purchasing Overhead Activity Part X12 Plantwide: Manufacturing 100,000 35,000 52,500 48 Which product is undercosted? 1,200 600 1. Calculate the activity consumption ratios for each product. Round your answers to two decimal places. Consumption Ratios 600,000 65,000 297,500 Part YK7 72 Part X12 8,800 3,400 100,000 350,000 2. Calculate the consumption ratios for the plantwide rate (direct labor hours). Round your answers to two decimal places. Consumption Ratios 120 10,000 4,000 Activity Driver Part YK7 3. If the machine hours were used for the plantwide rate, would this remove the cost distortion of a plantwide rate?
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