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4 September, 15:32

A company has two inspectors, each earning a salary of $75,000. One inspector works exclusively on inspecting parts received from outside suppliers, while the other spends 30% of her time inspecting parts and 70% of her time inspecting final products.

How much labor cost should be assigned to the activity, inspecting parts?

a. $100,000

b. $97,500

c. $75,000

d. $96,275

e. $95,000

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Answers (1)
  1. 4 September, 15:48
    0
    Option (b) $97,500

    Explanation:

    Data provided in the question:

    Salary of each inspector = $75,000

    Time spend by one inspector on inspecting parts = 100%

    Time spend by other inspector on inspecting parts = 30%

    Time spend by other inspector on inspecting final product = 100%

    Now,

    The labor cost that should be assigned to the activity, inspecting parts is

    = 100% of salary of one inspector + 30% of the salary of the other inspector

    = $75,000 + (30% of $75,000)

    = $75,000 + (0.30 * $75,000)

    = $75,000 + $22,500

    = $97,500

    Option (b) $97,500
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