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?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 4CE: Larsen, Inc., produces two types of electronic parts and has provided the following data: There are...
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