Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

an activity-cost pool a. a measure of the activity performed serves as the cost allocation base. b. the costs have a cause-and-effect relationship with the

an activity-cost pool
a. a measure of the activity performed serves as the cost allocation base.
b. the costs have a cause-and-effect relationship with the cost-allocation base for that activity.
c. the cost pools are homogeneous over time.
d. costs in a cost pool can always be traced directly to products.
e. each pool pertains to a narrow and focused set of costs.
Answer the following question(s) using the information below.
Peters Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2019, manufacturing overhead cost estimates total $420,000 for an annual production capacity of 12 million pages.
For 2019, Peters Printers has decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis:
Cost pool
Manufacturing overhead costs
Activity level
Design changes
$60,000
300 design changes
Setups
320,000
5,000 setups
Inspections
40,000
8,000 inspections
Total manufacturing overhead costs
$420,000
During 2019, two customers, World Makers and Happy Studios, are expected to use the following printing services:
Activity
World Makers
Happy Studios
Pages
60,000
76,000
Design changes
10
0
Setups
20
10
Inspections
30
38
4. What is the cost driver rate if manufacturing overhead costs are considered one large cost pool and are assigned based on 12 million pages of production capacity?
a. $0.05 per page
b. $0.035 per page
c. $0.35 per page
d. $0.025 per page
e. $0.045 per page
5. Using pages printed as the only overhead cost driver, what is the manufacturing overhead cost estimate for World Makers during 2019?
a. $2,500
b. $21,000
c. $1,500
d. $2,700
e. $2,100

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Between The Lines Of The Balance Sheet The Plain Mans Guide To Published Accounts

Authors: Michael Greener

2nd Edition

0080240712, 9780080240718

More Books

Students also viewed these Accounting questions