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LaserprintLaserprint Corporation owns a small printing press that prints leaflets, brochures, and advertising materials. LaserprintLaserprint classifies its various printing jobs as standard jobs or special
LaserprintLaserprint Corporation owns a small printing press that prints leaflets, brochures, and advertising materials. LaserprintLaserprint classifies its various printing jobs as standard jobs or special jobs. To see how activity-based costing would affect the costs of standard and specialjobs, LaserprintLaserprint collects the following information for the fiscal year 20172017 that just ended. LaserprintLaserprint's simple job-costing system has two direct-cost categories (direct materials and direct labor) and a single indirect-cost pool. LaserprintLaserprint operates at capacity and allocates all indirect costs using printing machine-hours as the allocation base. LaserprintLaserprint is concerned about the accuracy of the costs assigned to standard and special jobs and therefore is planning to implement anactivity-based costing system. LaserprintLaserprint's ABC system would have the samedirect-cost categories as its simple costing system. However, instead of a singleindirect-cost pool there would now be six categories for assigning indirect costs: design, purchasing, setup, printing machine operations, marketing, and administration. Requirement 1. Calculate the cost of a standard job and a special job under the simple costing system. 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. Now, completing the table for total costs of standard jobs, special jobs and then cost per job for each type of job. Data Table Cause-and-Effect Relationship Between Allocation Base and Activity Cost Standard Job Special Job Total Number of Price per job Cost of supplies per job printing jobs 900 $ 1,600 $ 1,900 280 170 $ 210 10 1,800 230 $ d Direct labor costs per job Printing machine-hours per job 10 Cost of printing machine operations $ 729,000 Indirect costs of operating printing machines increase with printing machine-hours i Setup-hours per job 486,000 Indirect setup costs increase with setup-hours Setup costs Total number of purchase orders 360 460 oPurchase order costs 28,700 Indirect purchase order costs increase with number of purchase orders Design costs 12,000 $ 38,000 $ 50,000 Design costs are allocated to standard and special
LaserprintLaserprint Corporation owns a small printing press that prints leaflets, brochures, and advertising materials. LaserprintLaserprint classifies its various printing jobs as standard jobs or special jobs.
To see how activity-based costing would affect the costs of standard and specialjobs, LaserprintLaserprint collects the following information for the fiscal year 20172017 that just ended.
LaserprintLaserprint's simple job-costing system has two direct-cost categories (direct materials and direct labor) and a single indirect-cost pool. LaserprintLaserprint operates at capacity and allocates all indirect costs using printing machine-hours as the allocation base. LaserprintLaserprint is concerned about the accuracy of the costs assigned to standard and special jobs and therefore is planning to implement anactivity-based costing system. LaserprintLaserprint's ABC system would have the samedirect-cost categories as its simple costing system. However, instead of a singleindirect-cost pool there would now be six categories for assigning indirect costs: design, purchasing, setup, printing machine operations, marketing, and administration.
Requirement 1. Calculate the cost of a standard job and a special job under the simple costing system.
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.
Now, completing the table for total costs of standard jobs, special jobs and then cost per job for each type of job.
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