Question: Consumption Ratios; Activity Rates
Felicidad Company produces two types of get-well cards: scented and regular. Drivers for the four activities are as follows:
Required: 1. Calculate the consumption ratios for the four drivers.
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.
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?