Velshi Printers has contracts to complete weekly supplements required by forty−six customers. For the year 2015, manufacturing overhead cost estimates total $1,440,000 for an annual production capacity of 16 million pages.
For 2015 Velshi Printers has decided to evaluate the use of additional cost pools. After analyzing manufacturing overheadcosts, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during theanalysis:
Cost pool
Manufacturing overhead costs
Activity level
Design changes
$160,000
400 design changes
Setups
1,230,000
2,000 setups
Inspections
50,000
8,000 inspections
Total manufacturing overhead costs
$1,440,000
During 2015, two customers, Money Managers and HospitalSystems, are expected to use the following printing services:
Activity
Money Managers
Hospital Systems
Pages
100,000
116,000
Design changes
12
0
Setups
19
9
Inspections
27
35
Assuming activity−cost pools are used, what are the activity−cost driver rates for design changes, setups, and inspections cost pools?
Answers: 2
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