Whitman Printing has contracts to complete weekly supplements required by its' customers. For the current year,...

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Whitman Printing has contracts to complete weekly supplements required by its' customers. For the current year, manufacturing overhead cost estimates total $336,000 for an annual production capacity of 12 million pages. Whitman Printing 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 Design changes Setups Inspections Total manufacturing overhead costs Manufacturing overhead costs $ 60,000 96,000 180,000 $336,000 Activity level 200 design changes 8,000 setups 12,000 inspections Two customers, Money Managers and Hospital Systems, are expected to use the following printing services: Money Managers Activity Hospital Systems Pages 80,000 96,000 Design changes 10 0 Setups (one per job) 50 12 Inspections 40 12 Designs (one per job) 50 12 Page 1 of 2 Pages are a direct cost at $0.03 per page. Design costs per job average $1,000 and $1,200 for Money Managers and Hospital Systems, respectively. Whitman Printing sets prices at $0.10 per page, plus 120% of design costs. Assume that all costs are variable. Required: 1.Prepare income statements in contribution margin format for both customers using: a. Traditional (simple) costing with overhead applied on a page capacity basis b. Activity-based costing 2. Briefly discuss what new insights the ACB system used in part b provides to managers. SHOW ALL WORK Whitman Printing has contracts to complete weekly supplements required by its' customers. For the current year, manufacturing overhead cost estimates total $336,000 for an annual production capacity of 12 million pages. Whitman Printing 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 Design changes Setups Inspections Total manufacturing overhead costs Manufacturing overhead costs $ 60,000 96,000 180,000 $336,000 Activity level 200 design changes 8,000 setups 12,000 inspections Two customers, Money Managers and Hospital Systems, are expected to use the following printing services: Money Managers Activity Hospital Systems Pages 80,000 96,000 Design changes 10 0 Setups (one per job) 50 12 Inspections 40 12 Designs (one per job) 50 12 Page 1 of 2 Pages are a direct cost at $0.03 per page. Design costs per job average $1,000 and $1,200 for Money Managers and Hospital Systems, respectively. Whitman Printing sets prices at $0.10 per page, plus 120% of design costs. Assume that all costs are variable. Required: 1.Prepare income statements in contribution margin format for both customers using: a. Traditional (simple) costing with overhead applied on a page capacity basis b. Activity-based costing 2. Briefly discuss what new insights the ACB system used in part b provides to managers. SHOW ALL WORK