Silver Faces, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed: $$\begin{array} { l l }
\text { Activity } & \text { Cost Formula } \
\text { Maintenance } & \$ 15,000 + \$ 4 \text { per machine hour } \
\text { Machining } & \$ 35,000 + \$ 1 \text { per machine hour } \
\text { Inspection } & \$ 60,000 + \$ 750 \text { per batch } \
\text { Setups } & \$ 1,000 \text { per batch } \
\text { Purchasing } & \$ 50,000 + \$ 10 \text { per purchase order }
\end{array}$$ What is the budgeted inspection cost if there was production of 50,000 reflectors that will require 8,000 machine hours, 25 batches, and 15,000 purchase orders?
A)$18,750
B)$60,000
C)$66,000
D)$78,750

Question

Silver Faces, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed: $$\begin{array} { l l } 
\text { Activity } & \text { Cost Formula } \
\text { Maintenance } & \$ 15,000 + \$ 4 \text { per machine hour } \
\text { Machining } & \$ 35,000 + \$ 1 \text { per machine hour } \
\text { Inspection } & \$ 60,000 + \$ 750 \text { per batch } \
\text { Setups } & \$ 1,000 \text { per batch } \
\text { Purchasing } & \$ 50,000 + \$ 10 \text { per purchase order }
\end{array}$$ What is the budgeted inspection cost if there was production of 50,000 reflectors that will require 8,000 machine hours, 25 batches, and 15,000 purchase orders?
A)$18,750
B)$60,000
C)$66,000
D)$78,750

Quizplus · Accepted Answer

The budgeted inspection cost is calculated using the cost formula for inspection: $60,000 + $750 per batch. With 25 batches, the calculation is $60,000 + ($750 * 25) = $60,000 + $18,750 = $78,750.

Silver Faces, Inc What Is the Budgeted Inspection Cost If There Was Production