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Velshi Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2018, manufacturing overhead cost estimates total $1,320,000 for an annual
Velshi Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2018, manufacturing overhead cost estimates total $1,320,000 for an annual production capacity of 12 million pages. For 2018 Velshi 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 Design changes Setups Inspections Total manufacturing overhead costs Manufacturing overhead costs $120,000 1,120,000 80,000 $1,320,000 Activity level 500 design changes 3,000 setups 11,000 inspections During 2018, two customers, Money Managers and Hospital Systems, are expected to use the following printing services: Activity Pages Design changes Setups Inspections Money Managers 50,000 14 Hospital Systems 66,000 0 21 11 25 33 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? O A. $0.09 per page O B. $0.10 per page C. $0.01 per page OD. $0.11 per page
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