Problem
Jefferson, Inc. produces two different products (Product 5 and Product Z) using two different activities: Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. The cost of Machining is $500,000, while the cost of Inspection is $30,000. The activity drivers are used as follows:
| |
Product 5
|
Product Z
|
Total
|
|
Machine hours
|
1,200
|
4,800
|
6,000
|
|
Number of batches
|
60
|
20
|
80
|
What proportion of Inspection activity is used by Product Z?