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Velshi Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2020, manufacturing overhead cost estimates total $1,020,000 for an
Velshi Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2020, manufacturing overhead cost estimates total $1,020,000 for an annual production capacity of 17 million pages. For 2020 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 $170,000 750,000 100,000 $1,020,000 Activity level 300 design changes 2,000 setups 9,000 inspections During 2020, 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 11 20 28 Hospital Systems 66,000 0 10 36 What is the cost driver rate if manufacturing overhead costs are considered one large cost pool and are assigned based on 17 million pages of production capacity? A. $0.05 per page B. $0.04 per page C. $0.06 per page D. $0.01 per page ...
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