Process Activity Analysis Garnett Company incurred an activity cost of $360,000
ID: 2489984 • Letter: P
Question
Process Activity Analysis Garnett Company incurred an activity cost of $360,000 for inspecting 60,000 units of production. Management determined that the inspecting objectives could be met without inspecting every unit. Therefore, rather than inspecting 60,000 units of production, the inspection activity was limited to 30% of the production. Determine the inspection activity cost per unit on 60,000 units of total production both before and after the improvement. Round your answers to the nearest cent. Inspection activity before improvement $ per unit Inspection activity after improvement $ per unit
Explanation / Answer
inspection activity cost before improvement = no of units inspected = 60000
inspection cost = 360000
inspection cost per unit before improvement = 360000/60000 = 6 per unit
inspection activity cost after improvement = no of units inspected = 60000*30% = 18000
inspection cost = 360000
inspection cost per unit after improvement = 360000/18000 = 2 per unit
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