Velshi
Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2018, manufacturing overhead cost estimates total $1,760,000 for an annual production capacity of 16 million pages.
For 2018 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 | $160,000 | 200 design changes |
| Setups | 1,530,000 | 5,000 setups |
| Inspections | 70,000 | 7,000 inspections |
| Total manufacturing overhead costs | $1,760,000 |
During 2018, two customers, Money Managers and Hospital Systems, are expected to use the following printing services:
| Activity | Money Managers | Hospital Systems |
Assuming activity-cost pools are used, what are the activity-cost driver rates for design changes, setups, and inspections cost pools?
◦ $800.00 per change, $306.00 per setup, $10.00 per inspection
◦ $800.00 per change, $14.00 per setup, $218.57 per inspection
◦ $32.00 per change, $10.00 per setup, $306.00 per inspection
◦ $22.86 per change, $306.00 per setup, $350 per inspection
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