Answer the following questions using the information below:
Whitman Printing has contracts to complete weekly supplements required by forty-six customers. For the year 20X5, manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages.
For 2010 Whitman Printing 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 2010, two customers, Money Managers and Hospital Systems, are expected to use the following printing services:

-Using the cost driver rate determined in the previous question, what is the manufacturing overhead cost estimate for Hospital Systems during 2010?
A)Manufacturing overhead costs applied to Hospital Systems total $4,200.
B)Manufacturing overhead costs applied to Hospital Systems total $3,800.
C)Manufacturing overhead costs applied to Hospital Systems total $5,320.
D)Manufacturing overhead costs applied to Hospital Systems total $7,200.

Question

Answer the following questions using the information below:
Whitman Printing has contracts to complete weekly supplements required by forty-six customers. For the year 20X5, manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages.
For 2010 Whitman Printing 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 2010, two customers, Money Managers and Hospital Systems, are expected to use the following printing services:
 
-Using the cost driver rate determined in the previous question, what is the manufacturing overhead cost estimate for Hospital Systems during 2010?
A)Manufacturing overhead costs applied to Hospital Systems total $4,200. 
B)Manufacturing overhead costs applied to Hospital Systems total $3,800. 
C)Manufacturing overhead costs applied to Hospital Systems total $5,320. 
D)Manufacturing overhead costs applied to Hospital Systems total $7,200.

Quizplus · Accepted Answer

To determine the manufacturing overhead cost estimate for Hospital Systems during 2010, we need to calculate the total amount of cost driver units for Hospital Systems and multiply it by the cost driver rate. From the table, we can see that Hospital Systems is expected to have 4 design changes, 7 setups, and 14 inspections. Therefore, the total amount of cost driver units for Hospital Systems is:
4 + 7 + 14 = 25

The cost driver rate was determined in a previous question and is $212 per cost driver unit. Therefore, the manufacturing overhead cost estimate for Hospital Systems during 2010 is:

$212 x 25 = $5,320

Therefore, the best choice is C.

Answer the Following Questions Using the Information Below