Baldwin Printers has contracts to complete weekly supplements required by fortyminustwo customers. For the year2011, manufacturing overhead cost estimates total$1,840,000 for an annual production capacity of 20 million pages.

For 2011 Baldwin Printers has decided to evaluate the use of additional cost pools. After analyzing manufacturing overheadcosts, it was determined that number of designchanges, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during theanalysis:

Cost pool	Manufacturing overhead	Activity level
Design changes	$ 520,000	400 design changes
Setups	1,040,000	8,000 setups
Inspections	280,000	14,000 inspections
Total manufacturing overhead costs	$1,840,000

During2011, twocustomers, Wellington Drugs and HomeAgain, are expected to use the following printingservices:

Activity	Wellington Drugs	Home Again
Pages Printed	90,000	56,000
Design changes	7	4
Setups	10	10
Inspections	20	18

What is the cost driver rate if manufacturing overhead costs are considered one large cost pool and are assigned based on 20 million pages of productioncapacity?

A.$0.10 per page B.$0.092 per pageC.$1.84 per pageD.$0.07 per page

Using pages printed as the only overhead costdriver, what is the manufacturing overhead cost estimate for Wellington Drugs during2011?

A.$11,200 B.$5,000C.$18,500D.$8,280

Assuming activityminuscost pools areused, what are the activityminuscost driver rates for designchanges, setups, and inspections costpools?

A.$286 per designchange, $15.38 persetup, $20 per inspectionB.$1,300 per designchange, $130.00persetup, $20 per inspectionC.$360 per designchange, $3.20persetup, $6.40 per inspectionD.$1,680 per designchange, $5.38 persetup, $42 per inspection

Using the three cost pools to allocate overheadcosts, what is the total manufacturing overhead cost estimate for Wellington Drugs during2011?

A.$9,100B.$10,192C.$5,400D.$10,800

When overhead costs are assigned using the single costdriver, number of pagesprinted, then

A.Wellington Drugs is grossly underbilled for thejob, while other jobs will be unfairly overbilled.B.Wellington Drugs will likely seek to do business with competitors in the future.C.Wellington Drugs is unfairly overbilled for its use of printing resources.D.Baldwin Printers will want to retain this highlyminusprofitable customer.