Consumption Ratios; Activity RatesSaludable 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 1,080 720 Setup hours 420 180 Machine hours 960 2,880 Number of moves  2,880 720 The following activity data have been collected: Inspecting products $45,000 setting up equipment 28,500 Machining 30,720 Moving materials 16,200     Required:1. Calculate the consumption ratios for the four drivers (round to two decimal places).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.3. Calculate the activity rates that would be used to assign costs to each product (round to two decimal places).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?

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Consumption Ratios; Activity Rates
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 1,080 720
Setup hours 420 180
Machine hours 960 2,880
Number of moves  2,880 720

The following activity data have been collected:

Inspecting products $45,000
setting up equipment 28,500
Machining 30,720
Moving materials 16,200
   

Required:
1. Calculate the consumption ratios for the four drivers (round to two 
decimal places).
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.
3. Calculate the activity rates that would be used to assign costs to each 
product (round to two decimal places).
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?

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