Answer the Following Questions Using the Information Below:
Velshi Printers

question 121

Multiple Choice

Answer the following questions using the information below:
Velshi Printers 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 12 million pages.
For 2015 Velshi 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:
$$\begin{array} { l cc } \text { Cost pool } & \text { Manufacturing overhead costs } & \text { Activity level } \\\text { Design changes } & \$ 120,000 & 300 \text { design changes } \\\text { Setups } & 640,000 & 5,000 \text { setups } \\\text { Inspections } & \underline{80,000} & 8,000 \text { inspections } \\\text { Total manufacturing overhead costs } & \$ 840,000 &\end{array}$$ During 2015, two customers, Money Managers and Hospital Systems, are expected to use the following printing services:
$$\begin{array} { l r r } \text { Activity } & \text { Money Managers } & \text { Hospital Systems } \\\text { Pages } & 60,000 & 76,000 \\\text { Design changes } & 10 & 0 \\\text { Setups } & 20 & 10 \\\text { Inspections } & 30 & 38\end{array}$$
-Using the three cost pools to allocate overhead costs,what is the total manufacturing overhead cost estimate for Money Managers during 2015?

• A) $13,700
• B) $6,500
• C) $6,860
• D) $10,192

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Definitions:

Supply Curve

A graphical representation of the relationship between the price of a good and the quantity of the good that suppliers are willing to sell.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price within a specified period.

Market Price

The current value at which an asset or service is being traded in the market.

Battery Packs

Collections of battery cells or batteries configured in a pack to provide power to electronic devices or systems.