Question

Xylon Corp. 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 10 million pages. For 2015, 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 $ 120,000 200 design changes Setups 640,000 4,000 setups Inspections 80,000 16,000 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 2 Setups 20 10 Inspections 38 30 11) 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? Under ABC costing, what is the inspection cost allocated to Money Managers?

Answer 1

Answer:

the cost per overhead rate and the inspection cost allocation is $0.08 per page and $190 respectively

Explanation:

The computation is shown below;

The cost per overhead rate is

= $840,000 ÷ 10,000,000

= $0.08 per page

The inspection cost allocated to Money Managers is

= $80,000 ÷ 16,000 × $38

= $190

hence, the cost per overhead rate and the inspection cost allocation is $0.08 per page and $190 respectively

The same would be considered and relevant too