Fulltone Corporation owns a small printing press that prints leaflets, brochures, and advertising materials. Fulltone classifies its various printing jobs as standard jobs or special jobs. Fulltone's simple job-costing system has two direct-cost categories (direct materials and direct labor) and a single indirect-cost pool. Fulltone operates at capacity and allocates all indirect costs using printing machine-hours as the allocation base. Fulltone 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. Fulltone'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 standard and specialjobs, Fulltone collects the following information for the fiscal year 2017 that just ended.

1.	Calculate the cost of a standard job and a special job under the simple costing system.
2.	Calculate the cost of a standard job and a special job under the activity-based costing system.
3.	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 Fulltone use the new cost information from its activity-based costing system to better manage its business?

	A	B	C	D	E
1		Standard Job	Special Job	Total	Cause-and-Effect Relationship Between Allocation Base and Activity Cost
2	Number of printing jobs	1,000	500
3	Price per job	$1,700	$2,200
4	Cost of supplies per job	$130	$230
5	Direct labor costs per job	$120	$280
6	Printing machine-hours per job	10	10
7	Cost of printing machine operations			$420,000	Indirect costs of operating printing machines increase with printing machine-hours
8	Setup-hours per job	6	8
9	Setup costs			$310,000	Indirect setup costs increase with setup-hours
10	Total number of purchase orders	340	440
11	Purchase order costs			$28,080	Indirect purchase order costs increase with number of purchase orders
12	Design costs	$13,000	$34,000	$47,000	Design costs are allocated to standard and special jobs based on a special study of the design department
13	Marketing costs as a percentage of revenues	5%	5%	$140,000
14	Administration costs			$122,200	Demand for administrative resources increases with direct labor costs