Silver Faces, Inc What Is the Total Cost for Production of 50,000 Reflectors

question 73

Multiple Choice

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 total cost for production of 50,000 reflectors that will require 8,000 machine hours, 25 batches, and 15,000 purchase orders?

• A)$393,750
• B)$933,410
• C)$3,937,500
• D)$38,410,000

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Definitions:

Conservatism

An accounting principle that requires potential expenses and liabilities to be recognized immediately, but revenue only when it is ensured.

Accounting Concept

Fundamental principles or theories that underpin the practice and procedure of accounting.

Manufacturing Business

This type of business produces goods from raw materials through a combination of manual labor and machines.

Finished Goods Inventory

Manufactured products that are complete and ready for sale but have not yet been sold to customers.