Scenario IV: Goodmark Company produces two types of birthday cards: scented and regular. Expected product data for the coming year are given below. Overhead costs are identified by activity. Scented Cards Regular Cards Total
Units produced 20,000 200,000 -
Prime costs $160,000 $1,500,000 $1,660,000
Direct labor hours 20,000 160,000 180,000
Number of setups 60 40 100
Machine hours 10,000 80,000 90,000
Inspection hours 2,000 16,000 18,000
Number of moves 180 120 300

Overhead costs:

Setting up equipment $240,000
Moving materials 120,000
Machining 200,000
Inspecting products 160,000

1. Answer the following questions:

a. Calculate the activity consumption ratios for Scented cards (round to two decimal places).

Setups:
Moving materials:
Machining:
Inspection:

b. If only one rate based on direct labor hours were used to assign overhead, Scented Cards would receive about percent of the total overhead. Upon comparing this overhead assignment with the activity consumption ratios calculated in part a, it is clear that a plantwide rate would

the activity-based cost assignments.
2. Calculate the four activity rates (round to the nearest cent).

Setups: per setup
Moving materials: per move
Machining: per machine hour
Inspection: per inspection hour

3. Calculate the total unit costs using activity rates to assign overhead (round to the nearest cent).

Scented:
Regular: