Question

Zapato Company produces two types of boots vaquero and vaquera. There are four activities associated with the two products. Drivers for the four activities are as follows: Vaquero Vaquera Cutting hours 2.190 5.400 Assembly hours 2,850 4,650 Inspection hours 920 2.430 Rework hours 450 Required: 1. Calculate the consumption ratios for the four drivers. Round your answers to two decimal places Activity Driver Vaquero Vaquera Cutting hours Assembly hours Inspection hout Rework hours 2. Is there evidence of product diversity? Explain

Answer 1

Answer is given below

Vaquero 2,190 2,850 Cutting hours Assembly hours Inspection hours Rework hours Vaquera 5,400 4,650 2,430 450 Total 7,590 7,500 3,350 600 150 Acivity driver Cutting hours Assembly hours Inspection hours Rework hours Vaquero 0.29 0.38 0.27 0.25 Vaquera 0.71 0.62 0.73 0.75 2 Yes there evidence of product diversity The ratio of consumption of hours is different for both products Cutting hours Assembly hours Inspection hours Rework hours $22.00 Per cutting hour $30.00 per assembly hour $20.00 Per inspection hour $75.00 Per rework hour Working notes: Activity Total Total Overheads Activities Activity rate Cutting hours Assembly hours Inspection hours Rework hours $165,000 $223,500 $64,100 $48,750 7,500 7,450 3,205 650 $22.00 Per cutting hour $30.00 per assembly hour $20.00 Per inspection hour $75.00 Per rework hour Cutting hours Assembly hours Inspection hours Rework hours Vaquero Vaquera 2,100 5,400 2,800 4,650 775 2,430 2001 4500 Total 7500 7450 3205 650