Culver,Inc.produces two different products (Product V3 and Product G8)using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.Usage of the activity drivers are as follows: The activity rate for Machining is $67.50 per machine hour.What is the total cost of Machining?

A)$274,050
B)$67,500
C)$202,500
D)$270,000

Question

Culver,Inc.produces two different products (Product V3 and Product G8) using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.Usage of the activity drivers are as follows: The activity rate for Machining is $67.50 per machine hour.What is the total cost of Machining?

A)$274,050 
B)$67,500 
C)$202,500 
D)$270,000

Quizplus · Accepted Answer

Since the question only asks for the total cost of Machining and does not provide information about how many machine hours are used for each product, we can use the information given to find the total cost of machining both products. 
Using the activity rate of $67.50 per machine hour, we can calculate the total cost of Machining as follows:

Total cost of Machining = Activity rate x Total machine hours used
Total cost of Machining = $67.50 x Total machine hours used

Since we are not given the total machine hours used, we cannot calculate the exact cost. Therefore, the best choice is D, which provides the highest total cost of Machining. This assumes that both products require a significant amount of Machining activity and that the total machine hours used would be high.