Whitman Printing has contracts to complete weekly printing supplements for its customers. For the current year, manufacturing overhead cost estimates total $336,000 for an annual production capacity of 12 million pages.

Whitman Printing decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, Whitman determined that the 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	Activity level
Design changes	$ 60,000	200 design changes
Setups	96,000	8,000 setups
Inspections	180,000	12,000 inspections
Total manufacturing overhead costs	$336,000

Two customers, Money Managers and Hospital Systems, are expected to use the following printing services:

Activity	Money Managers	Hospital Systems
Pages	80,000	96,000
Design changes	10	0
Setups (one per job)	50	12
Inspections	40	12
Designs (one per job)	50	12

Pages are a direct cost at $0.03 per page. Design costs per job average $1,000 for Money Managers and $1,200 for Hospital Systems. Whitman Printing sets prices at $0.10 per page, plus 120% of design costs.

Assume that all costs are variable.

Prepare income statements in contribution margin format for both customers using:

a. Traditional (simple) costing with overhead applied on a page capacity basis.

b. Activity-based costing.

c. How much per page should Whitman Printing charge Money Managers if Whitman wants to break even on this customer? Assume that manufacturing overhead costs and design costs are fixed, and that manufacturing overhead costs are allocated to customers based on pages sold as a percentage of production capacity.