Noble Printers has contracts to complete weekly supplements required by forty-six customers.For the year 2011,overhead cost estimates total $420,000 for an annual production capacity of 12 million pages.
For 2011 Noble Printers has decided to evaluate the use of additional cost pools.After analyzing overhead costs,it was determined that the number of design changes,setups,and inspections are the primary overhead cost drivers.The following information was gathered during the analysis.

During 2011,two customers,Wealth Managers and Health Systems,are expected to use the following printing services.

Required:
a. Calculate the cost driver rate if overhead costs are considered one large cost pool and are assigned based on 12 million pages of production capacity.
b. Using the cost driver rate determined in (a),calculate the overhead cost estimate for Wealth Managers during 2011.
c. Assuming cost pools for design changes,setups,and inspections are used,calculate the cost driver rates for each of the three cost pools.
d. Using the cost driver rates determined in (c),calculate the overhead cost estimate for Wealth Managers during 2011.
e. Review the overhead costs estimates computed in (b)and (d).Discuss what conclusions can be drawn from this exercise in regard to the use of cost pools.

Question

Noble Printers has contracts to complete weekly supplements required by forty-six customers.For the year 2011,overhead cost estimates total $420,000 for an annual production capacity of 12 million pages.
For 2011 Noble Printers has decided to evaluate the use of additional cost pools.After analyzing overhead costs,it was determined that the number of design changes,setups,and inspections are the primary overhead cost drivers.The following information was gathered during the analysis.

During 2011,two customers,Wealth Managers and Health Systems,are expected to use the following printing services.

Required:
a. Calculate the cost driver rate if overhead costs are considered one large cost pool and are assigned based on 12 million pages of production capacity.
b. Using the cost driver rate determined in (a),calculate the overhead cost estimate for Wealth Managers during 2011.
c. Assuming cost pools for design changes,setups,and inspections are used,calculate the cost driver rates for each of the three cost pools.
d. Using the cost driver rates determined in (c),calculate the overhead cost estimate for Wealth Managers during 2011.
e. Review the overhead costs estimates computed in (b)and (d).Discuss what conclusions can be drawn from this exercise in regard to the use of cost pools.

Quizplus · Accepted Answer

The Answer of Noble Printers has contracts to complete weekly supplements required by forty-six customers.For the year 2011,overhead cost estimates total $420,000 for an annual production capacity of 12 million pages.
For 2011 Noble Printers has decided to evaluate the use of additional cost pools.After analyzing overhead costs,it was determined that the number of design changes,setups,and inspections are the primary overhead cost drivers.The following information was gathered during the analysis.

During 2011,two customers,Wealth Managers and Health Systems,are expected to use the following printing services.

Required:
a. Calculate the cost driver rate if overhead costs are considered one large cost pool and are assigned based on 12 million pages of production capacity.
b. Using the cost driver rate determined in (a),calculate the overhead cost estimate for Wealth Managers during 2011.
c. Assuming cost pools for design changes,setups,and inspections are used,calculate the cost driver rates for each of the three cost pools.
d. Using the cost driver rates determined in (c),calculate the overhead cost estimate for Wealth Managers during 2011.
e. Review the overhead costs estimates computed in (b)and (d).Discuss what conclusions can be drawn from this exercise in regard to the use of cost pools.

Noble Printers Has Contracts to Complete Weekly Supplements Required by Forty-Six