Cost Accounting Case Study 2009

Answer the following questions using the information below:

Ernsting Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2009, manufacturing overhead cost estimates total $420,000 for an annual production capacity of 12 million pages.

For 20X5, Ernsting 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 inspections

Total manufacturing overhead costs $420,000

During 2009, two customers, Wealth Managers and Health Systems, are expected to use the following printing services:

Activity Wealth Managers Health Systems

Pages 60,000 76,000

Design changes 10 0

Setups 20 10

Inspections 30 38

REQUIRED (show all calculations):

1) What is the cost driver rate if manufacturing overhead costs are considered one large cost pool and are assigned based on 12 million...