Question

Baird Manufacturing Company makes tents that it sells directly to camping enthusiasts through a mail-order marketing program. The company pays a quality control expert $52,500 per year to inspect tents and ensure that they meet the company's quality standards.

Required:
Classify the quality control costs as either fixed or variable.
Calculate the quality control cost per unit if the company produces 10,000 tents per year.

Answer 1

The quality control cost at Baird Manufacturing Company is a fixed cost at $52,500 per year. The cost per unit for quality control when producing 10,000 tents is $5.25 per tent.

Step-by-step explanation:

The quality control costs at Baird Manufacturing Company are classified as fixed costs, as they do not vary with the level of output and remain constant at $52,500 per year. To calculate the quality control cost per unit for 10,000 tents produced in a year, we would divide the total annual quality control cost by the number of units produced.

Quality control cost per unit = Total quality control cost / Number of tents produced

Quality control cost per unit = $52,500 / 10,000 tents

Quality control cost per unit = $5.25 per tent