Calverton,Inc.produces two different products (Standard and Luxury)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.Standard is assigned $150,000 in Machining cost,and $22,500 in Inspection cost.What proportion of Machining activity is used by Luxury?
A)30%
B)33%
C)67%
D)70%

Question

Quizplus · Accepted Answer

Luxury uses 70% of the Machining activity. This is calculated by subtracting the Machining cost assigned to Standard ($150,000) from the total Machining cost ($500,000) to find the Machining cost for Luxury, which is $350,000. Then, divide $350,000 by the total Machining cost ($500,000) to find the proportion, which is 70%.