Lynwood,Inc.produces two different products (Product A and Product X)using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The activity rate for Machining is $125 per machine hour,and the activity rate for Inspection is $500 per batch.The activity drivers are used as follows: What is the amount of Inspection cost assigned to Product A?
A)$7,500
B)$22,500
C)$30,000
D)$125,000

Question

Lynwood,Inc.produces two different products (Product A and Product X)using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The activity rate for Machining is $125 per machine hour,and the activity rate for Inspection is $500 per batch.The activity drivers are used as follows:  What is the amount of Inspection cost assigned to Product A?
A)$7,500 
B)$22,500 
C)$30,000 
D)$125,000

Quizplus · Accepted Answer

The total amount of Inspection cost for Lynwood, Inc. is $150,000 ($500 per batch x 300 batches). Product A uses 50 batches of Inspection, so the amount of Inspection cost assigned to Product A is $22,500 ($500 per batch x 50 batches).