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 purchasing cost if there was production of 50,000 reflectors that will require 8,000 machine hours, 25 batches, and 15,000 purchase orders?
A)$150,000
B)$200,000
C)$100,000
D)none of these

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 purchasing cost if there was production of 50,000 reflectors that will require 8,000 machine hours, 25 batches, and 15,000 purchase orders?
A)$150,000
B)$200,000
C)$100,000
D)none of these

Quizplus · Accepted Answer

The budgeted purchasing cost is calculated using the formula: $50,000 + $10 per purchase order. For 15,000 purchase orders, the cost is $50,000 + ($10 * 15,000) = $200,000.

Silver Faces, Inc What Is the Budgeted Purchasing Cost If There Was Production