Figure 7-1.The receiving department of Owen has three activities: unloading, counting goods, and inspecting. Unloading requires a forklift that is leased for $15,000 per year. The forklift is used only for unloading. The fuel for the forklift is $2,000 per year. Inspection requires special testing equipment that has a depreciation of $500 per year and an operating cost of $1,000 per year. Receiving has four employees who each have an average salary of $35,000 per year. The work distribution matrix for the receiving personnel is as follows:

-Refer to Figure 7-1. Calculate the cost of counting.
A) $54,000
B) $56,000
C) $52,000
D) $50,500

Question

Figure 7-1.The receiving department of Owen has three activities: unloading, counting goods, and inspecting. Unloading requires a forklift that is leased for $15,000 per year. The forklift is used only for unloading. The fuel for the forklift is $2,000 per year. Inspection requires special testing equipment that has a depreciation of $500 per year and an operating cost of $1,000 per year. Receiving has four employees who each have an average salary of $35,000 per year. The work distribution matrix for the receiving personnel is as follows:
 
-Refer to Figure 7-1. Calculate the cost of counting.
A) $54,000 
B) $56,000 
C) $52,000 
D) $50,500

Quizplus · Accepted Answer

To calculate the cost of counting we need to add up the salaries of the employees who perform this activity. According to the work distribution matrix, two employees are involved in counting for 60% of their time, and two employees are involved for 40% of their time. Thus, the total cost of counting is:

2 employees x $35,000 x 60% + 2 employees x $35,000 x 40% = $42,000 + $14,000 = $56,000

Therefore, the best choice is B.