Silver Faces, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed: $$\begin{array} { l l }
\text { Activity } & \text { Cost Formula } \
\text { Maintenance } & \$ 15,000 + \$ 4 \text { per machine hour } \
\text { Machining } & \$ 35,000 + \$ 1 \text { per machine hour } \
\text { Inspection } & \$ 60,000 + \$ 750 \text { per batch } \
\text { Setups } & \$ 1,000 \text { per batch } \
\text { Purchasing } & \$ 50,000 + \$ 10 \text { per purchase order }
\end{array}$$ What is the budgeted setup costs if there was production of 50,000 reflectors that will require 8,000 machine hours, 25 batches, and 15,000 purchase orders?
A)$1,000
B)$25,000
C)$8,000,000
D)$15,000,000

Question

Silver Faces, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed: $$\begin{array} { l l } 
\text { Activity } & \text { Cost Formula } \
\text { Maintenance } & \$ 15,000 + \$ 4 \text { per machine hour } \
\text { Machining } & \$ 35,000 + \$ 1 \text { per machine hour } \
\text { Inspection } & \$ 60,000 + \$ 750 \text { per batch } \
\text { Setups } & \$ 1,000 \text { per batch } \
\text { Purchasing } & \$ 50,000 + \$ 10 \text { per purchase order }
\end{array}$$ What is the budgeted setup costs if there was production of 50,000 reflectors that will require 8,000 machine hours, 25 batches, and 15,000 purchase orders?
A)$1,000
B)$25,000
C)$8,000,000
D)$15,000,000

Quizplus · Accepted Answer

The budgeted setup costs are calculated based on the number of batches. Given that the setup cost is $1,000 per batch and there are 25 batches, the total setup cost is $1,000 * 25 = $25,000.

Silver Faces, Inc What Is the Budgeted Setup Costs If There Was Production