Silver Faces, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed: What is the budget for maintenance if 20,000 reflectors were made that required 3,500 machine hours, 12 batches, and 5,000 purchase orders?

Question

Silver Faces, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed:  What is the budget for maintenance if 20,000 reflectors were made that required 3,500 machine hours, 12 batches, and 5,000 purchase orders?

Quizplus · Accepted Answer

Using the given cost drivers and activity costs, we can calculate the budget for maintenance as follows:

Maintenance cost = (Machine hours x Cost per machine hour) + (Batches x Cost per batch) + (Purchase orders x Cost per purchase order)
Maintenance cost = (3,500 x $6.50) + (12 x $1,200) + (5,000 x $0.25)
Maintenance cost = $22,750

Therefore, the budget for maintenance if 20,000 reflectors were made that required 3,500 machine hours, 12 batches, and 5,000 purchase orders is $22,750, which is option C.