Question

Aniline Corporation owns a small printing press that prints leaflets, brochures, and advertising materials. Aniline classifies its various printing jobs as standard jobs or special jobs. (Click the icon to view additional information.)

Answer 1

43 Requirement 1. Calculate the cost of a standard job and a special job under the simple costing system. 44 45 46 47 Cost of printing machine operations Setup costs Purchase order costs Design costs Marketing costs as a percentage of revenues Administration costs Total Indirect Costs 1008000 781200 27360 42000 259200 48 49 50 309120 51 2426880 52 53 Standard Job Total 54 2400 Special Job 1200 10 12000 Number of printing jobs Printing machine-hours per job Total machine-hours 55 10 56 24000 36000 57 58 2426880 59 Total Indirect Costs (A) Total machine-hours (B) Indirect cost rate per machine-hour (A/B) 36000 67.413 Per Machine Hour 60 61

62 63 Standard Job 210.00 170.00 64 Cost of supplies per job Direct labor cost per job Indirect cost allocated to each job (10*67.413) Total Costs Special Job 310.00 220.00 674.13 1204.13 65 674.13 66 1054.13 67

782) 79 Total Cost of Activity 1008000 781200 27360 80 Machine operations Setups Purchase orders Design Marketing Administration / / / / / / Total Qty Consumed 36000 25200 760 6480000 672000 ABC Allocation rate 28.00 Per Machine Hour 31.00 per setup hour 36.00 per purchase order 0.04 per dollar of sales 0.46000 per dollar of direct manuf. labor cost 81 82 259200 309120 83 84 85 Assignment of Total Costs 86 87 88 Total Costs Standard Job 504,000 408,000 Special Job 372,000 264,000 89 90 91 92 Cost of supplies Direct labor cost per job Indirect costs allocated: Machine operations Setups Purchase orders Design Marketing Administration Total costs 93 672,000 446,400 11,880 163,200 187,680 2,393,160 336,000 334,800 15,480 96,000 121,440 1,539,720 94 95 96

98 Total costs Number of printing jobs Cost of each Job 2,393,160 2400 99 1,539,720 1200 1,283.10 100 997.15 101 1023) 103 104 105 Cost per job Simple Costing System Activity-based Costing System Difference (Simple - ABC) Standard Job 1054.13 997.15 56.98 Special Job 1204.13 1,283.10 -78.97 106 107 Relative to the ABC system, the simple costing system overcosts standard jobs and undercosts special jobs 108 109