5-25 Activity-based costing service company. Speediprint Corporation owns a small printing press that prints leaflets, brochures, and advertising materials. Speediprint classifies its various printing jobs as stan- dard jobs or special jobs. Speediprint's simple job-costing system has two direct-cost categories (direct materials and direct labor) and a single indirect-cost pool Speediprint operates at capacity and allocates all indirect costs using printing machine-hours as the allocation base. Speediprint is concerned about the accuracy of the costs assigned to standard and special jobs and therefore is planning to implement an activity-based costing system. Speediprint's ABC system would have the same direct-cost categories as its simple costing system. However, instead of a single indirect-cost pool there would now be six categories for assigning indirect costs: design, purchasing, setup, printing machine operations, marketing, and administration. To see how activity-based costing would affect the costs of stan- dard and special jobs, Speediprint collects the following information for the fiscal year 2017 that just ended. Scanned with CamScanner Home Insert Page Layout Formula Data Review D E Cause-and-Effect Relationship Between Allocation Base and Activity Cost Total Standard Job Special Job 400 200 $ 600 $ 750 $ 100 $ 125 $ 90 $ 100 10 10 $75,000 Indirect costs of operating printing machines increase with printing machine hours 2 Number of printing jobs 3 Price per job 4 Cost of supplies per job 5 Direct labor costs per job 6 Printing machine-hours per job 7 Cost of printing machine operations 8 9 Setup-hours per job 10 Setup costs 11 Total number of purchase orders 12 Purchase order costs 13 14 Design costs 15 4 7 $ 45,000 Indirect setup costs increase with sup hours 400 500 $4,000 $16,000 $ 18,000 Indirect purchase order costs increase with number of purchase orders $ 20,000 Design costs are allocated to standard and special jobs based on a special study of the design department 5% 5% Marketing costs as a percentage of 16 revenues 17 Administration costs $ 19,500 $ 24,000 Demand for administrative resources increases with direct labor costs 1. Calculate the cost of a standard job and a specialjob under the simple costing system. Required 2. Calculate the cost of a standard job and a special job under the activity-based costing system 2. Compare the costs of a standard job and a special job in requirements 1 and 2 Why do the simple and activity-based costing systems differ in the cost of a standard job and a special job? 4. How might Speediprint use the new cost information from its activity-based costing system to better manage its business? Scanned with Car Scanner