Aniline simple job-costing system has two direct-cost categories (direct materials and direct labor) and a single indirect-cost pool.

Aniline operates at capacity and allocates all indirect costs using printing machine-hours as the allocation base.

Aniline 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.

Aniline 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.

Date Table: Explain this problem step by step. Thank you.

				Cause-and-Effect Relationship Between
	Standard Job	Special Job	Total	Allocation Base and Activity Cost
Number of printing jobs	1,400	700
Price per job	$1,400	$2,200
Cost of supplies per job	$75	$230
Direct labor costs per job	$130	$250
Printing machine-hours per job	10	10
Cost of printing machine operations			$462,000	Indirect costs of operating printing machines
				increase with printing machine-hours
Setup-hours per job	7	9
Setup costs			$402,500	Indirect setup costs increase with setup-hours
Total number of purchase orders	360	460
Purchase order costs			$24,600	Indirect purchase order costs increase with
				number of purchase orders
Design costs	$12,000	$20,000	$32,000	Design costs are allocated to standard and special
				jobs based on a special study of the design department
Marketing costs as a percentage of revenues	5%	5%	$175,000
Administration costs			$160,650	Demand for administrative resources increases
				with direct labor costs

Calculate the cost of a standard job and a special job under the simple costing system. (Round interim calculations to three decimal places, X.XXX and your final answers to the nearest cent, X.XX.)

	Standard
Simple Costing System	Job
Cost of supplies per job	$75.00
Direct manufacturing labor cost per job	130.00
Indirect cost allocated to each job	598.45
Total costs	$803.45

Special

Job

$230.00

250.00

598.45

$1,078.45

Requirement 2. Calculate the cost of a standard job and a special job under the activity-based costing system.

Begin by calculating the allocation rates for the following activities. (Abbreviations used: $ = Dollar, DM = Direct manufacturing, Qty. = Quantity. Round the allocation rates to the nearest cent for all activities except Administration; round Administration to five decimal places, X.XXXXX.)

	Total cost of activity	/	Total qty consumed	=	ABC Allocation rate
Machine operations	$462,000	/	21,000	=	$22.00	per machine-hour

Setups

$402,500

/

16,100

=

$25.00

per setup-hour

Purchase orders

$24,600

/

820

=

$30.00

per purchase order

Administration

$160,650

/

$357,000

=

$0.45000

per $ of DM labor cost

Now, completing the table for total costs of standard jobs, special jobs and then cost per job for each type of job. (Round your answers to the nearest whole dollar except cost per job. Round cost per job to the nearest cent.)

	Standard
ABC Costing System	Job
Cost of supplies	$105,000
Direct manufacturing labor costs	182,000
Indirect costs allocated:
Machine operations	308,000
Setups	245,000
Purchase orders	10,800
Design	12,000
Marketing	98,000
Administration	81,900
Total costs	$1,042,700

Special

Job

$161,000

175,000

154,000

157,500

13,800

20,000

77,000

78,750

$837,050

Cost of each job

$744.79

$1,195.79