Calverton,Inc.produces two different products (Standard and Luxury)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 cost of Machining is $500,000,while the cost of Inspection is $30,000.Standard is assigned $150,000 in Machining cost,and $22,500 in Inspection cost.What proportion of Inspection activity is used by Luxury?
A)25%
B)33%
C)67%
D)75%

Question

Quizplus · Accepted Answer

The total Inspection cost is $30,000, and Standard is assigned $22,500. Therefore, the remaining cost for Luxury is $30,000 - $22,500 = $7,500. The proportion used by Luxury is $7,500 / $30,000 = 25%.