Rollo Company has developed cost formulas for the drivers of the following production activities:
- The budgeted inspection cost for 20 setups is
A) $175,860.
B) $40,000.
C) $34,000.
D) $30,000.

Question

Rollo Company has developed cost formulas for the drivers of the following production activities: 
- The budgeted inspection cost for 20 setups is
A) $175,860. 
B) $40,000. 
C) $34,000. 
D) $30,000.

Quizplus · Accepted Answer

The cost formula for inspection is $20,000 + ($500 x number of setups). So for 20 setups, the cost would be $20,000 + ($500 x 20) = $30,000. Therefore, the correct option is C ($34,000 is not an option).

Rollo Company Has Developed Cost Formulas for the Drivers of the Following