Answer:
B. Money Managers is grossly under billed for the job, while other jobs will be unfairly over billed
Explanation:
The single overhead rate would be $ 0.07 per page
Overhead Rate = $ 840,000/ 12 million pages = 0.07 per page.
The other rates are
design changes rate = $ 120,000/300= $ 400 per design
Inspections rate = $ 80,000/8000= $ 10 per inspection
Setups rate = $ 640,000/5000= $ 128 per setup
Money managers will be under billed for the job as the overhead rates for other costs are higher than the single overhead rate which is $ 0.07 per page.
And if other overhead rates are used other jobs will be over billed.
Using a single overhead rate for 60,000 pages for Money Managers would mean 60,000 * $ 0.07 = $ 4200
Where as if the same job is billed using other overhead rates it would cost
Money Managers $ 6860 = $ 4000 + $ 2560 + $ 300
Design = $400 * 10 = $ 4000
Setups = $ 128 * 20 = $ 2560
Inspections $ 10 * 30 = $ 300
So it is under billed and other jobs over billed.
