Ruby Faces, Inc., has done a cost analysis for the production of reflectors in its factory. The following activities and cost drivers have been developed: $$\begin{array} { l l }
\text { Activity } & \frac { \text { Cost Formula } } { } \
\hline \text { Maintenance } & \$ 10,000 + \$ 3 \text { per machine hour } \
\text { Machining } & \$ 40,000 + \$ 2 \text { per machine hour } \
\text { Inspection } & \$ 70,000 + \$ 550 \text { per batch } \
\text { Setups } & \$ 2,000 \text { per batch } \
\text { Purchasing } & \$ 30,000 + \$ 20 \text { per purchase order }
\end{array}$$ What is the machining cost for production of 60,000 reflectors that will require 6,000 machine hours, 20 batches, and 15,000 purchase orders?
A)$40,000
B)$52,000
C)$38,000
D)$60,500

Question

Ruby Faces, Inc., has done a cost analysis for the production of reflectors in its factory. The following activities and cost drivers have been developed: $$\begin{array} { l l } 
\text { Activity } & \frac { \text { Cost Formula } } { } \
\hline \text { Maintenance } & \$ 10,000 + \$ 3 \text { per machine hour } \
\text { Machining } & \$ 40,000 + \$ 2 \text { per machine hour } \
\text { Inspection } & \$ 70,000 + \$ 550 \text { per batch } \
\text { Setups } & \$ 2,000 \text { per batch } \
\text { Purchasing } & \$ 30,000 + \$ 20 \text { per purchase order }
\end{array}$$ What is the machining cost for production of 60,000 reflectors that will require 6,000 machine hours, 20 batches, and 15,000 purchase orders?
A)$40,000
B)$52,000
C)$38,000
D)$60,500

Quizplus · Accepted Answer

The machining cost is calculated as the fixed cost plus the variable cost. The fixed cost is $40,000, and the variable cost is $2 per machine hour. For 6,000 machine hours, the variable cost is $2 * 6,000 = $12,000. Therefore, the total machining cost is $40,000 + $12,000 = $52,000.

Ruby Faces, Inc What Is the Machining Cost for Production of 60,000 Reflectors