Author Question: Xylon Corp. has contracts to complete weekly supplements required by forty-six customers. For the ... (Read 57 times)

jc611 · **on:** Mar 6, 2021

Xylon Corp. has contracts to complete weekly supplements required by forty-six customers. For the year 2018, manufacturing overhead cost estimates total $940,000 for an annual production capacity of 10 million pages.

For 2018, Xylon 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

$160,000

500 design changes

Setups

692,000

2,000 setups

Inspections

88,000

8,000 inspections

Total manufacturing overhead costs

$940,000

During 2018, two customers, Money Managers and Hospital Systems, are expected to use the following printing services:

Activity

Money Managers

Hospital Systems

Pages

70,000

86,000

Design changes

11

3

Setups

19

9

Inspections

26

64

Under ABC costing, what is the inspection cost allocated to Hospital Systems?
◦ $704
◦ $80
◦ $286
◦ $6,574

tsternbergh47 · **Reply #1 on:** Mar 6, 2021

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