The Lighthouse Factory manufactures lighthouses, and the managers sell them to the tourists in Rodanthe, North Carolina. A manager revealed that total revenues of lighthouses were $3,500,000

The only indirect appraisal costs associated with 15,000 hours of inspections in manufacturing were $20 per hour. The manager's report indicated that the there were no direct costs associated with the machine because there were no resources assigned to the management of quality of the machines.

Required:
Compute the total cost and the percent of revenues associated with the inspections at the Lighthouse Factory.
A) $275,000 total cost; 5.62% of revenues.
B) $300,000 total cost; 8.57% of revenues.
C) $350,000 total cost; 9.64% of revenues.
D) $400,000 total cost; 2.08% of revenues.
E) $450,000 total cost; 2.50% of revenues.

B
Explanation: B) Total cost [(15,000 × $20)] = $300,000 total appraisal costs
Percent of revenues: [($300,000 / $3,500,000 )] = .0857 or 8.57% of revenues