Rydingsward, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed:
$$\begin{array} { l l }
\text { Activit } & \text { Cost Formula } \
\hline \text { Maintenance } & \$ 15,000 + \$ 4 \text { per machine hour } \
\text { Machiring } & \$ 35,000 + \$ 1 \text { per machine hour } \
\text { Inspection } & \$ 60,000 + \$ 750 \text { per batch } \
\text { Setups } & \$ 1,000 \text { per batch } \
\text { Purchasing } & \$ 50,000 + \$ 10 \text { per purchase order }
\end{array}$$
-Refer to the figure.What are the budgeted setup costs if there was production of 50,000 reflectors that will require 8,000 machine hours,25 batches,and 15,000 purchase orders?
A)$1,000
B)$25,000
C)$8,000,000
D)$15,000,000

Question

Rydingsward, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed:
$$\begin{array} { l l } 
\text { Activit } & \text { Cost Formula } \
\hline \text { Maintenance } & \$ 15,000 + \$ 4 \text { per machine hour } \
\text { Machiring } & \$ 35,000 + \$ 1 \text { per machine hour } \
\text { Inspection } & \$ 60,000 + \$ 750 \text { per batch } \
\text { Setups } & \$ 1,000 \text { per batch } \
\text { Purchasing } & \$ 50,000 + \$ 10 \text { per purchase order }
\end{array}$$
-Refer to the figure.What are the budgeted setup costs if there was production of 50,000 reflectors that will require 8,000 machine hours,25 batches,and 15,000 purchase orders?
A)$1,000
B)$25,000
C)$8,000,000
D)$15,000,000

Quizplus · Accepted Answer

The budgeted setup costs are calculated based on the number of batches. With 25 batches and a cost of $1,000 per batch, the total setup costs are $25,000.

Rydingsward, Inc -Refer to the Figure