question 1)

Answer the following question(s) using the information below.

Peter's Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2019, manufacturing overhead cost estimates total $420,000 for an annual production capacity of 12 million pages.

For 2019, Peter's 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 $60,000 300 design changes

Setups 320,000 5,000 setups

Inspections 40,000 8,000 inspection

Total manufacturing

overhead costs $420,000

During 2019, two customers, World Makers and Happy Studios, are expected to use the following printing services:

Activity World Makers Happy Studios

Pages 60,000 76,000

Design changes 10 0

Setups 20 10

Inspections 30 38

1.What is the cost driver rate if manufacturing overhead costs are considered one large cost pool and are assigned based on 12 million pages of production capacity?

a.$0.05 per page

b.$0.035 per page

c.$0.35 per page

d.$0.025 per page

e.$0.045 per page

2.Using pages printed as the only overhead cost driver, what is the manufacturing overhead cost estimate for World Makers during 2019?

a.$2,500

b.$21,000

c.$1,500

d.$2,700

e.$2,100

3.Assuming activity-cost pools are used, what are the activity-cost driver rates for design changes, setups, and inspections cost pools?

a.$200 per change, $64 per setup, $5 per inspection

b.$180 per change, $76 per setup, $4 per inspection

c.$150 per change, $64 per setup, $4 per inspection

d.$180 per change, $76 per setup, $5 per inspection

e.$200 per change, $5 per setup, $64 per inspection