Rollo Company has developed cost formulas for the drivers of the following production activities: The budgeted inspection cost for 20 setups is
A) $175,860.
B) $40,000.
C) $34,000.
D) $30,000.

Question

Rollo Company has developed cost formulas for the drivers of the following production activities:  The budgeted inspection cost for 20 setups is
A) $175,860. 
B) $40,000. 
C) $34,000. 
D) $30,000.

Quizplus · Accepted Answer

We have to use the cost formula for inspection cost with the given information.
Total inspection cost for 20 setups = ($1,000 + $10 × 20) × 20 = ($1,000 + $200) × 20 = $34,000.
Therefore, the budgeted inspection cost for 20 setups is $34,000.

Rollo Company Has Developed Cost Formulas for the Drivers of the Following