Assuming activity-cost pools are used, what are the activity-cost ...

[jake]

Assuming activity-cost pools are used, what are the activity-cost driver rates for design changes, setups, and inspections cost pools?
 
  Velshi Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2015, manufacturing overhead cost estimates total 840,000 for an annual production capacity of 12 million pages.
 
  For 2015 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 Manufacturing overhead costs Activity level
  Design changes  120,000 300 design changes
  Setups 640,000 5,000 setups
  Inspections 80,000 8,000 inspections
   Total manufacturing overhead costs 840,000
 
  During 2015, two customers, Money Managers and Hospital Systems, are expected to use the following printing services:
 
  Activity Money Managers Hospital Systems
  Pages 60,000 76,000
  Design changes 10 0
  Setups 20 10
  Inspections 30 38
 
  A) 400 per change, 128 per setup, 10 per inspection
  B) 360 per change, 320 per setup, 6.40 per inspection
  C) 168 per change, 538 per setup, 42 per inspection
  D) 286 per change, 152 per setup, 20 per inspection

Question 2

It is not necessary to measure a business transaction in dollars.
 a. True
   b. False
   Indicate whether the statement is true or false

[k2629]

Answer to Question 1

Answer: A

Answer to Question 2

False