Answer the Following Question(s)using the Information Below

question 128

Multiple Choice

Answer the following question(s) using the information below.Ernsting Printers has contracts to complete weekly supplements required by forty-six customers.For the year 2018, manufacturing overhead cost estimates total $420,000 for an annual production capacity of 12 million pages.For 2018 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:
During 2018, two customers, Wealth Managers and Health Systems, are expected to use the following printing services:

-When selling price is cost plus 25% and costs are assigned using the single cost driver, number of pages printed, then

• A)Ernsting Printers will want to drop Wealth Managers as a customer.
• B)Wealth Managers will likely seek to do business with competitors.
• C)Wealth Managers is unfairly over billed for its use of printing resources.
• D)Wealth Managers is under billed for the job, while other jobs will be unfairly over billed.
• E)All customers will be under billed for their jobs.

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