Question: Xylon Corp. has contracts to complete weekly supplements required by forty-six customers. For the year 2020, manufacturing overhead cost estimates total $930,000 for an annual
Xylon Corp. has contracts to complete weekly supplements required by forty-six customers. For the year 2020, manufacturing overhead cost estimates total $930,000 for an annual production capacity of 10 million pages.
For 2020, Xylon 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 | $160,000 | 500 design changes |
| Setups | 602,000 | 3000 setups |
| Inspections | 168,000 | 14,000 inspections |
| Total manufacturing overhead costs | $930,000 |
During 2020, two customers, Money Managers and Hospital Systems, are expected to use the following printing services:
| Activity | Money Managers | Hospital Systems |
| Pages | 50,000 | 66,000 |
| Design changes | 14 | 6 |
| Setups | 20 | 10 |
| Inspections | 26 | 64 |
If manufacturing overhead costs are considered one large cost pool and are assigned based on 10 million pages of production capacity, what is the cost driver rate? (Round the final answer to three decimal places.)
- A. $0.082 per page
- B. $0.093 per page
- C. $0.060 per page
- D. $0.033 per page
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