Multiple Choice
Mount Vernon Furniture manufactures expensive tables. Its varnishing department is fully automated and requires substantial inspection to keep the machines operating properly. An improperly varnished table is very expensive to correct. Inspection hours for the 10,000 tables varnished in September totaled 2,500 hours by 16 employees. Eight quarts of varnish were used, on average, for each table. The standard amount of varnish per table is nine quarts. The cost of inspection for September was equal to the budgeted amount of $76,000.
What is the inspection cost per unit?
a. $30.40
b. $7.60
c. $3,800
d. $4,000
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