Speediprint Corporation owns a small printing press that prints leaflets, brochures, and advertising materials. Speediprint classifies...

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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. 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 standard and special jobs, Speediprint collects the following information for the fiscal year 2017 that just ended. Home Insert Page Layout Formulas Data Review View D H 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 8 9 Setup-hours per job 4 7 10 Setup costs 11 Total number of purchase orders 400 500 12 Purchase order costs 13 14 Design costs $4,000 $16,000 15 Marketing costs as a percentage of 16 revenues 5% 5% $ 19,500 17 Administration costs $ 75,000 Indirect costs of operating printing machines increase with printing machine-hours $ 45,000 Indirect setup costs increase with setup-hours $ 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 $ 24,000 Demand for administrative resources increases with direct labor costs Required 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? 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. 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 standard and special jobs, Speediprint collects the following information for the fiscal year 2017 that just ended. Home Insert Page Layout Formulas Data Review View D H 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 8 9 Setup-hours per job 4 7 10 Setup costs 11 Total number of purchase orders 400 500 12 Purchase order costs 13 14 Design costs $4,000 $16,000 15 Marketing costs as a percentage of 16 revenues 5% 5% $ 19,500 17 Administration costs $ 75,000 Indirect costs of operating printing machines increase with printing machine-hours $ 45,000 Indirect setup costs increase with setup-hours $ 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 $ 24,000 Demand for administrative resources increases with direct labor costs Required 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?