Taylor Corporation produces two models of their leather brie

Taylor Corporation produces two models of their leather brief cases: deluxe and standard. The four activities and four drivers are as follows:

Hours

Activities:

Cost

Driver

Deluxe

Standard

Total

Cutting

$ 96,000

Cutting hours

2,200

1,300

3,500

Assembling

42,000

Assembly hours

1,150

980

2,130

Inspecting

15,000

Inspection hours

800

500

1,300

Reworking

8,000

Rework hours

20

35

55

Required:

Calculate the consumption ratios for the four drivers, rounding to 2 decimal places.

Calculate the activity rates that would be used to assign costs to each product. Round your answer to two decimal places.

Calculate the unit cost assuming that 500 deluxe models were produced and 700 standard models were produced, rounded to the nearest cent.

			Hours
Activities:	Cost	Driver	Deluxe	Standard	Total
Cutting	$ 96,000	Cutting hours	2,200	1,300	3,500
Assembling	42,000	Assembly hours	1,150	980	2,130
Inspecting	15,000	Inspection hours	800	500	1,300
Reworking	8,000	Rework hours	20	35	55

Solution

1) CONSUMPTION RATIOS: Hours CONSUMPTION RATIO Activities: Driver Deluxe Standard Total Deluxe Standard Cutting Cutting hours 2,200 1,300 3,500 0.63 0.37 Assembling Assembly hours 1,150 980 2,130 0.54 0.46 Inspecting Inspection hours 800 500 1,300 0.62 0.38 Reworking Rework hours 20 35 55 0.36 0.64 Note: Consumption ratio for Cutting: For deluxe = 2200/3500 = 0.63; for standard = 1300/3500 = 0.37 For other activities, ratios have been worked out as above. 2) ACTIVITY RATES: Hours Activities: Cost Driver Deluxe Standard Total Activity Rates = Cost/ Total Hours Cutting 96000 Cutting hours 2,200 1,300 3,500 27.43 Assembling 42000 Assembly hours 1,150 980 2,130 19.72 Inspecting 15000 Inspection hours 800 500 1,300 11.54 Reworking 8000 Rework hours 20 35 55 145.45 3) UNIT COST: Units produced 500 700 Cutting 60343 35657 96000 Assembling 22676 19324 42000 Inspecting 9231 5769 15000 Reworking 2909 5091 8000 Total cost 95159 65841 161000 Cost per unit $               190.32 $                94.06