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 total cost for production of 50,000 reflectors that will require 8,000 machine hours, 25 batches, and 15,000 purchase orders?
A)$393,750
B)$933,410
C)$3,937,500
D)$38,410,000

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 total cost for production of 50,000 reflectors that will require 8,000 machine hours, 25 batches, and 15,000 purchase orders?
A)$393,750
B)$933,410
C)$3,937,500
D)$38,410,000

Quizplus · Accepted Answer

The total cost is calculated by adding the costs from each activity: Maintenance: $15,000 + ($4 * 8,000) = $47,000; Machining: $35,000 + ($1 * 8,000) = $43,000; Inspection: $60,000 + ($750 * 25) = $78,750; Setups: $1,000 * 25 = $25,000; Purchasing: $50,000 + ($10 * 15,000) = $200,000. Total cost = $47,000 + $43,000 + $78,750 + $25,000 + $200,000 = $393,750.

Silver Faces, Inc What Is the Total Cost for Production of 50,000 Reflectors