Figure 7-5.Rizzo Manufacturing produces two types of cameras: 35mm and digital. The cameras are produced using one continuous process. Four activities have been identified: machining, setups, receiving, and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs, and the other related data are as follows:

-Refer to Figure 7-5. Calculate a consumption ratio for setups on the digital cameras.
A) 0.688
B) 0.730
C) 0.700
D) 0.714
E) 0.500

Question

Figure 7-5.Rizzo Manufacturing produces two types of cameras: 35mm and digital. The cameras are produced using one continuous process. Four activities have been identified: machining, setups, receiving, and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs, and the other related data are as follows:
 
-Refer to Figure 7-5. Calculate a consumption ratio for setups on the digital cameras.
A) 0.688 
B) 0.730 
C) 0.700 
D) 0.714 
E) 0.500

Quizplus · Accepted Answer

To calculate the consumption ratio for setups on digital cameras, we need to divide the total setup costs for digital cameras by the total resource driver for setups on digital cameras.

Total setup costs for digital cameras: $60,000 
Total resource driver for setups on digital cameras: 84

Consumption ratio = Total setup costs for digital cameras / Total resource driver for setups on digital cameras
= $60,000 / 84
= 714.2857

Rounding this to the nearest whole number gives us a consumption ratio of 714.

Therefore, the correct answer is D) 0.714.