Velshi Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2015, manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages.

For 2015 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 $ 120,000 300 design changes

Setups 640,000 5,000 setups

Inspections 80,000 8,000 inspections

Total manufacturing overhead costs $840,000

During 2015, two customers, Money Managers and Hospital Systems, are expected to use the following printing services:

Activity Money Managers Hospital Systems

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) $0.10 per page

B) $0.07 per page

C) $0.70 per page

D) $0.05 per page

2) Using pages printed as the only overhead cost driver, what is the manufacturing overhead cost estimate for Money Managers during 2015?

A) $5,000

B) $3,500

C) $4,200

D) $6,000