Plant Overhead for ABC Corp in $150 Million Per Year

question 35

Essay

Plant overhead for ABC Corp in $150 million per year, a portion of which (20%) is attributable to inspection costs which are charged to products on the basis the number of parts in the products. The plant produces 500,000 units per year, and on the average, each product has 20 parts.
Required:
What is the average inspection cost in a product? What is the inspection cost for a product with 50 parts?

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