Accounting homework
Gladmark company produces two types of get well cards scented and regular drivers for the four activities as follows:
Scented Regular
Inspection hours 40 160
Set up hours 50 50
Machine hours 200 600
Number of moves 225 75
1. Calculate the consumption ratios for the four drivers
Is there evidence of product diversity? Explain
Referring to the data above the following data has been calculated
Inspecting products 2000
Setting up equipment 2,500
Machining 4000
Moving materials 900
1. Calculate the activity rates that would be used to assign cost to each product
2. Suppose the activity rate for inspecting products is $20 per inspection hour how many hours of inspection are expected for the coming year
To calculate the consumption ratios for the four drivers, you need to divide the total quantity of each driver by the total quantity of each product.
1. Calculation of consumption ratios:
- Inspection Hours:
- Scented: 40 hours / 2000 scented cards = 0.02 hours per card
- Regular: 160 hours / 2000 regular cards = 0.08 hours per card
- Set Up Hours:
- Scented: 50 hours / 2000 scented cards = 0.025 hours per card
- Regular: 50 hours / 2000 regular cards = 0.025 hours per card
- Machine Hours:
- Scented: 200 hours / 2000 scented cards = 0.1 hours per card
- Regular: 600 hours / 2000 regular cards = 0.3 hours per card
- Number of Moves:
- Scented: 225 moves / 2000 scented cards = 0.1125 moves per card
- Regular: 75 moves / 2000 regular cards = 0.0375 moves per card
Now, let's analyze whether there is evidence of product diversity. Product diversity refers to the extent to which different products consume different amounts of resources.
By comparing the consumption ratios between the scented and regular cards, we can determine if there is evidence of product diversity. In this case, there is evidence of product diversity because the consumption ratios differ for each type of card across all four drivers.
Moving on to the next part of your question:
2. To calculate the activity rates used to assign costs to each product, you need to divide the total cost of each driver by the total quantity of that driver.
- Inspection Activity Rate:
- Total Cost for Inspecting Products: $20 * 2000 = $40,000
- Activity Rate = $40,000 / 2000 hours = $20 per inspection hour
Now, let's address the second part of your question:
3. If the activity rate for inspecting products is $20 per inspection hour, and you want to determine the expected number of inspection hours for the coming year, you need additional information. Specifically, the number of cards or products expected to be produced in the coming year.
Please provide the information about the expected production volume for the coming year, and I can help you calculate the expected number of inspection hours.
To calculate the consumption ratios for the four drivers, you need to divide the total activity for each driver by the total activity for both scented and regular cards combined. Here are the consumption ratios for each driver:
1. Inspection hours:
- Scented: 40 / (40 + 160) = 0.20
- Regular: 160 / (40 + 160) = 0.80
2. Set up hours:
- Scented: 50 / (50 + 50) = 0.50
- Regular: 50 / (50 + 50) = 0.50
3. Machine hours:
- Scented: 200 / (200 + 600) = 0.25
- Regular: 600 / (200 + 600) = 0.75
4. Number of moves:
- Scented: 225 / (225 + 75) = 0.75
- Regular: 75 / (225 + 75) = 0.25
To determine if there is evidence of product diversity, you can compare the consumption ratios for each driver between scented and regular cards. In this case, the ratios for inspection hours and set up hours are different between the two types of cards, indicating product diversity. However, the ratios for machine hours and number of moves are the same for both scented and regular cards, suggesting no product diversity in those areas.