Reference no: EM132510707

Quikprint Corporation owns a small printing press that prints leaflets, brochures, and advertising materials. It classifies its various printing jobs as standard jobs or special jobs. Quikprint's simple job-costing system has two direct-cost categories (direct materials and direct labor) and a single indirect cost pool. The company operates at capacity and allocates all indirect costs using printing machine-hours as the allocation base.

Quikprint 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. Its 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, Quikprint collects the following information for the fiscal year 2017 that just ended. The data is provided on the following page.

Required:

Question a. Calculate the cost of a standard job and a special job under the simple costing system.

Question b. Calculate the cost of a standard job and a special job under the activity-based costing system.

Question c. Compare the costs of a standard job and a special job in requirements a and b. Why do the simple and activity-based costing systems differ in the cost of a standard job and a special job?

Question d. How might Quikprint use the new cost information from its activity-based costing system to better manage its business?