Jackson,Inc.produces two different products (Product 5 and Product Z)using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The cost of Machining is $500,000,while the cost of Inspection is $30,000.Product 5 uses 20% of total machine hours and 75% of total batches.What is the total Inspection cost assigned to Product Z?
A)$7,500
B)$22,500
C)$125,000
D)$375,000

Question

Quizplus · Accepted Answer

Product 5 uses 75% of the total batches, so Product Z uses 25% of the total batches. The total Inspection cost is $30,000, so the cost assigned to Product Z is 25% of $30,000, which is $7,500.