CONSUMPTION RATIOS; ACTIVITY RATES
Gladmark 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
|
40
|
160
|
|
Setup hours
|
50
|
50
|
|
Machine hours
|
200
|
600
|
|
Number of moves
|
225
|
75
|
The following activity data have been collected:
|
Inspecting products
|
$3,000
|
|
Setting up equipment
|
3,750
|
|
Machining
|
6,000
|
|
Moving materials
|
1,350
|
Required:
1. Calculate the consumption ratios for the four drivers.
2. Is there evidence of product diversity? Explain.
3. Calculate the activity rates that would be used to assign costs to each product.
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?