Baldwin Printers Has Contracts to Complete Weekly Supplements Required by Forty-Two

question 97

Multiple Choice

Baldwin Printers has contracts to complete weekly supplements required by forty-two customers. For the year 2011, manufacturing overhead cost estimates total $1,840,000 for an annual production capacity of 20 million pages.
For 2011 Baldwin 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:
During 2011, two customers, Wellington Drugs and Home Again, are expected to use the following printing services:

-When overhead costs are assigned using the single cost driver,number of pages printed,then

• A)Baldwin Printers will want to retain this highly-profitable customer.
• B)Wellington Drugs will likely seek to do business with competitors in the future.
• C)Wellington Drugs is unfairly overbilled for its use of printing resources.
• D)Wellington Drugs is grossly underbilled for the job,while other jobs will be unfairly overbilled.

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Definitions:

Tariffs

Taxes imposed by a government on imported or exported goods.

United States

A country located in North America, consisting of 50 states, a federal district, five major self-governing territories, and various possessions, known for its large economy and advanced technology.

Import

The act of bringing goods or services into a country from abroad for sale.

U.S. Tariff

A tax imposed by the United States government on imported or, less commonly, exported goods.