Shaw Printers has contracts to complete weekly supplements required by forty-six customers. For the year...
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ShawPrinters has contracts to complete weekly supplements required by forty-six customers. For the year 2019, manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages. Currently, company is allocating its manufacturing overhead costs using a single plantwide OH rate based on number of pages. For 2019 Shaw Printers has decided to evaluate the use of additional cost pools based on ABC concept. 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
300 design changes
Setups
640,000
5,000 setups
Inspections
80,000
8,000 inspections
Total manufacturing overhead costs
$840,000
During 2019, 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
0
Setups
20
10
Inspections
30
38
Using current system, using pages printed as the only overhead cost driver, what is the factory overhead cost estimate for Money Managers during 2019?
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