Answer the following questions using the information below:
Monticello Corp manufactures expensive tables. Its varnishing department is fully automated and requires substantial inspection to keep the machines operating properly. An improperly varnished table is very expensive to correct. Inspection hours for the 5,000 tables varnished in September totaled 1,500 hours by 8 employees. Eight quarts of varnish were used, on average, for each table. The standard amount of varnish per table is nine quarts. The cost of inspection for September was equal to the budgeted amount of $40,000.
-The $40,000 represents a(n)________.
A) activity cost pool
B) possible cost allocation base
C) internal failure cost
D) work-in-process control

Question

Quizplus · Accepted Answer

The $40,000 represents an activity cost pool, which is a collection of costs that are related to a specific activity, in this case, the inspection of varnished tables.

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