Baldwin Printers has contracts to complete weekly supplements required by forty-two customers. For the year 2011, manufacturing overhead cost estimates total $1,840,000 for an annual production capacity of 20 million pages.
For 2011 Baldwin 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:
During 2011, two customers, Wellington Drugs and Home Again, are expected to use the following printing services:

-Using pages printed as the only overhead cost driver,what is the manufacturing overhead cost estimate for Wellington Drugs during 2011?
A)$5,000
B)$8,280
C)$11,200
D)$18,500

Question

Baldwin Printers has contracts to complete weekly supplements required by forty-two customers. For the year 2011, manufacturing overhead cost estimates total $1,840,000 for an annual production capacity of 20 million pages.
For 2011 Baldwin 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: 
During 2011, two customers, Wellington Drugs and Home Again, are expected to use the following printing services:

-Using pages printed as the only overhead cost driver,what is the manufacturing overhead cost estimate for Wellington Drugs during 2011?
A)$5,000 
B)$8,280 
C)$11,200 
D)$18,500

Quizplus · Accepted Answer

To calculate the manufacturing overhead cost estimate for Wellington Drugs, we need to use the following formula:

Manufacturing overhead cost estimate = (total estimated manufacturing overhead cost / total estimated pages) x pages printed

From the information given in the table, we know that Wellington Drugs is expected to print 55,000 pages during 2011. We also know that the total estimated manufacturing overhead cost for 2011 is $1,840,000 and the total estimated pages to be printed is 20 million.

Plugging in these values into the formula, we get:

Manufacturing overhead cost estimate = ($1,840,000 / 20,000,000) x 55,000
Manufacturing overhead cost estimate = $1.84 x 55,000
Manufacturing overhead cost estimate = $101,200

Therefore, the manufacturing overhead cost estimate for Wellington Drugs during 2011 is $8,280 (which is option B).

Baldwin Printers Has Contracts to Complete Weekly Supplements Required by Forty-Two