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?Q . 2 ) ( 5 0 ?points ) ?The Tracy Corporation has a machining facility specializing in jobs for the aircraft - components

?Q.2) (50 ?points) ?The Tracy Corporation has a machining facility specializing in jobs for the
aircraft-components market. Tracy's previous simple job-costing system had two direct-cost
categories (direct materials and direct manufacturing labor) ?and a single indirect-cost pool
(manufacturing overhead, allocated using direct manufacturing labor-hours). ?The indirect
cost-allocation rate of the simple system for 2010 ?would have been $115 ?per direct
manufacturing labor-hour.
Recently a team with members from product design, manufacturing, and accounting used an
ABC approach to refine its job-costing system. The two direct-cost categories were retained.
The team decided to replace the single indirect-cost pool with five indirect-cost pools. The
cost pools represent five activity areas at the plant, each with its own supervisor and budget
responsibility. Pertinent data are as follows:
Information-gathering technology has advanced to the point at which the data necessary for
budgeting in these five activity areas are collected automatically.
Two representative jobs processed under the ABC system at the plant in the most recent
period had the following characteristics:
Compute the manufacturing cost per unit for each job under the previous simple job-costing
system.
Compute the manufacturing cost per unit for each job under the activity-based costing
system.
Compare the per-unit cost figures for Jobs 410 ?and 411 ?computed in requirements 1 ?and 2.
Why do the simple and the activity-based costing systems differ in the manufacturing cost per
unit for each job? Why might these differences be important to Tracy Corporation?
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