Answer the following questions using the information below:
Velshi Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2010, manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages.
For 2010 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:
During 2010, two customers, Money Managers and Hospital Systems, are expected to use the following printing services:

-Using pages printed as the only overhead cost driver, what is the manufacturing overhead cost estimate for Money Managers during 2010?
A)$5,000
B)$3,500
C)$4,200
D)$6,000

Question

Answer the following questions using the information below:
Velshi Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2010, manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages.
For 2010 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:
  During 2010, two customers, Money Managers and Hospital Systems, are expected to use the following printing services:
 
-Using pages printed as the only overhead cost driver, what is the manufacturing overhead cost estimate for Money Managers during 2010?
A)$5,000 
B)$3,500 
C)$4,200 
D)$6,000

Quizplus · Accepted Answer

To calculate the manufacturing overhead cost estimate for Money Managers, we need to first calculate their percentage of total pages printed:
Money Managers: 200,000/1,200,000 = 0.1667 or 16.67%
Then we can use this percentage to calculate their share of total manufacturing overhead cost estimates:
0.1667 x $840,000 = $140,000
Finally, we can use the given information that pages printed is the only overhead cost driver to allocate this $140,000 to Money Managers:
$140,000 x (200,000/1,200,000) = $23,333.33
Therefore, answer choice C ($4,200) is the closest estimate.

Answer the Following Questions Using the Information Below