Speediprint Corporation owns a small printing press that prints leaflets, brochures, and advertising materials. Speediprint classifies its various printing jobs as standard jobs or special jobs.

To see how activity-based costing would affect the costs of standard and special jobs, Speediprint collects the following information for the fiscal year 2017 that just ended.

	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	400	200
3	Price per job	$600	$750
4	Cost of supplies per job	$100	$125
5	Direct labor costs per job	$90	$100
6	Printing machine-hours per job	10	10
7	Cost of printing machine operations			$75,000	Indirect costs of operating printing machines increase with printing machine-hours
8	Setup-hours per job	4	7
9	Setup costs			$45,000	Indirect setup costs increase with setup-hours
10	Total number of purchase orders	400	500
11	Purchase order costs			$18,000	Indirect purchase order costs increase with number of purchase orders
12	Design costs	$4,000	$16,000	$20,000	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%	$19,500
14	Administration costs			$24,000	Demand for administrative resources increases with direct labor costs

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 Speediprint use the new cost information from its activity-based costing system to better manage its business?

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.)

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ABC Allocation rate

Machine operations

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