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:

-Assuming activity-cost pools are used,what are the activity-cost driver rates for design changes,setups,and inspections cost pools?
A)$1,300 per design change, $130.00per setup, $20 per inspection
B)$360 per design change, $3.20per setup, $6.40 per inspection
C)$1,680 per design change, $5.38 per setup, $42 per inspection
D)$286 per design change,$15.38 per setup,$20 per inspection

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:

-Assuming activity-cost pools are used,what are the activity-cost driver rates for design changes,setups,and inspections cost pools?
A)$1,300 per design change, $130.00per setup, $20 per inspection 
B)$360 per design change, $3.20per setup, $6.40 per inspection 
C)$1,680 per design change, $5.38 per setup, $42 per inspection 
D)$286 per design change,$15.38 per setup,$20 per inspection

Quizplus · Accepted Answer

A)Design changes: $1,300 per design change = ($520,000 / 400 design changes)
Setups: $130.00 per setup = ($1,040,000 / 8,000 setups)
Inspections: $20 per inspection = ($280,000 / 14,000 inspections)

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