Author Question: Velshi Printers has contracts to complete weekly supplements required by forty-six customers. For ... (Read 28 times)

jessicacav · **on:** Jul 5, 2018

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

When costs are assigned using the single cost driver, number of pages printed, then ________.
A) Velshi Printers will want to retain this highly profitable customer
B) Money Managers will likely seek to do business with competitors
C) Money Managers is unfairly over billed for its use of printing resources
D) Money Managers is grossly under billed for the job, while other jobs will be unfairly over billed

Question 2

Accrued expenses are ordinarily listed on the balance sheet as current assets.
a. True
b. False

Indicate whether the statement is true or false