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?Q . 2 ) ( 5 0 ?points ) ?The Tracy Corporation has a machining facility specializing in jobs for the aircraft - components
?Q ?points ?The Tracy Corporation has a machining facility specializing in jobs for the
aircraftcomponents market. Tracy's previous simple jobcosting system had two directcost
categories direct materials and direct manufacturing labor ?and a single indirectcost pool
manufacturing overhead, allocated using direct manufacturing laborhours ?The indirect
costallocation rate of the simple system for ?would have been $ ?per direct
manufacturing laborhour.
Recently a team with members from product design, manufacturing, and accounting used an
ABC approach to refine its jobcosting system. The two directcost categories were retained.
The team decided to replace the single indirectcost pool with five indirectcost pools. The
cost pools represent five activity areas at the plant, each with its own supervisor and budget
responsibility. Pertinent data are as follows:
Informationgathering 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 jobcosting
system.
Compute the manufacturing cost per unit for each job under the activitybased costing
system.
Compare the perunit cost figures for Jobs ?and ?computed in requirements ?and
Why do the simple and the activitybased 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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