Answer the Following Question(s)using the Information Below

question 53

Multiple Choice

Answer the following question(s) using the information below.Wallace Printing has contracts to complete weekly supplements required by forty-six customers.For the year 2019, manufacturing overhead cost estimates total $420,000 for an annual production capacity of 10 million pages.For 2019 Wallace Printing 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 2019, two customers, Wayward Insurance and Hapless Systems, are expected to use the following printing services:

-When selling prices are based on costs assigned using the single cost driver, number of pages printed, then Hapless Systems

• A)is fairly billed because resources are allocated uniformly to all jobs.
• B)is grossly under billed for the job, while other jobs will be unfairly over billed.
• C)will be pleased because all customers will be under billed for their jobs.
• D)will contribute too little to profits, and Wallace Printing will not want to accept additional work.from the company
• E)will likely seek to do business with competitors.

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Definitions:

Cost of Goods Sold

The specific costs incurred in the production of a company's sold merchandise.

Gross Margin Ratio

A measure of a company's financial health, calculated as gross profit divided by net sales, showing the percentage of sales revenue that exceeds the cost of goods sold.

Perpetual Inventory System

An inventory management method that records the sale or purchase of inventory immediately through electronic tracking.

Gross Method

An accounting approach for recording purchases at the gross invoice amount before any trade discounts are taken.