Question

Corp. has contracts to complete weekly supplements required by forty-six customers. For the year 2018, manufacturing overhead cost estimates total $900,000 for an annual production capacity of 10 million pages. For 2018, Xylon 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: Cost pool Manufacturing overhead costs Design changes $190,000 Setups 550,000 Inspections 160,000 Total manufacturing overhead costs $900,000 Activity level 200 design changes 5,000 setups 16,000 inspections During 2018, two customers, Money Managers and Hospital Systems, use the following printing services: Activity Pages Design changes Setups Inspections Money Managers 70,000 15 18 25 Hospital Systems 86,000 7 8 63 Xylon charges $0.55/ page for Direct Materials and Direct Labor. A. What is the total cost for printing services for Money Managers? B. What is the total cost for printing services for Hospital Systems?

Answer 1

Particulars
Particulars	Manufacturing Overhead Costs	Activity Level	Activity Allocation Rate
Design Changes	190,000	200	950	Per Design Charge
Set-ups	550,000	5,000	110	Per Setup
Inspections	160,000	16,000	10	Per Inspection
Total	900,000

Question 1 and 2

Total Cost for Printing Services

Particulars	Money Managers	Hospital System
Pages Costs	38,500	47,300
Design Costs	14,250	6,650
Setup Costs	1,980	880
Inspection Costs	250	630
Total Printing Services Cost	54,980	55,460

Notes

Total Printing Services Cost is Sum of All Costs.

Money Managers

Pages Costs = 70,000 Pages * $ 0.55 per page ° $ 38,500

Deisgn Costs = 15 Design * $ 950 per Design = $ 14,250

Setup Costs = 18 Setups * $ 110 per Setup = $ 1980

Inspection = 25 inspection * $ 10 per Inspection = $ 250

For Hospital System

Pages Costs = 86,000 Pages * $ 0.55 per page ° $ 47,300

Deisgn Costs = 7 Design * $ 950 per Design = $ 6,650

Setup Costs = 8 Setups * $ 110 per Setup = $ 880

Inspection = 63 inspection * $ 10 per Inspection = $ 630