To implement an activity-based costing system for Snap Prints Company, the following activity cost pools can be identified:
- Printing
- Copying
- Designing
- Sales and Marketing
- Administration
- Maintenance
- Training
- Customer Service
- Quality Control
- Inventory Management
- Shipping and Receiving
- Research and Development
To implement an activity-based costing system for Snap Prints Company, the following activity cost pools can be identified:
Printing: This activity cost pool would include the costs associated with operating the high-speed offset printing presses, such as ink, paper, and maintenance.
Copying: This activity cost pool would include the costs associated with operating the copiers, such as toner, paper, and maintenance.
Designing: This activity cost pool would include the costs associated with designing and creating custom print and copy jobs, such as graphic design software and designer salaries.
Sales and Marketing: This activity cost pool would include the costs associated with sales and marketing efforts, such as advertising, sales commissions, and marketing materials.
Administration: This activity cost pool would include the costs associated with general administrative tasks, such as office supplies, utilities, and administrative salaries.
Maintenance: This activity cost pool would include the costs associated with maintaining and repairing the printing and copying equipment, such as equipment repairs and maintenance contracts.
Training: This activity cost pool would include the costs associated with training employees on new equipment and software, such as training materials and trainer salaries.
Customer Service: This activity cost pool would include the costs associated with providing customer service, such as customer service salaries and customer service materials.
Quality Control: This activity cost pool would include the costs associated with ensuring the quality of print and copy jobs, such as quality control salaries and quality control materials.
Inventory Management: This activity cost pool would include the costs associated with managing inventory, such as inventory management software and inventory management salaries.
Shipping and Receiving: This activity cost pool would include the costs associated with shipping and receiving print and copy jobs, such as shipping materials and shipping and receiving salaries.
Research and Development: This activity cost pool would include the costs associated with researching and developing new printing and copying technologies, such as research and development salaries and research and development materials.
These 12 activity cost pools can be used as the basis for an activity-based costing system for Snap Prints Company.
Complete question:
Snap Prints Company is a small printing and copying firm with three high-speed offset printing presses, five copiers (two color and three black-and-white), one collator, one cutting and folding machine, and one fax machine. To improve its pricing practices, owner manager Terry Morton is installing activity-based costing. Additionally, Terry employs five employees: two printers/designers, one receptionist/bookkeeper, one salesperson/copy-machine operator, and one janitor/delivery clerk, Terry can operate any of the machines and, in addition to managing the entire operation he performs the training, designing, selling and marketing functions.
As Snap Prints independent accountant who prepares tax forms and quarterly financial statements, you have been asked to identify the activities that would be used to accumulate overhead costs for assignment to jobs and customers. Using your knowledge of a small printing and copying firm (and some imagination), identify at least 12 activity cost pools as the start of an activity based costing system for Snap Prints Company