Question

Snap Prints Company is a small printing and copying fi rm with three high-speed offset printing...

Snap Prints Company is a small printing and copying fi rm with three high-speed
offset printing presses, fi ve copiers (two color and three black-and-white), one collator,

one cutting and folding machine, and one fax machine. To improve its pricing prac-
tices, owner-manager Terry Morton is installing activity-based costing. Additionally,

Terry employs fi ve 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.
Instructions
As Snap Prints’ independent accountant who prepares tax forms and quarterly fi nancial

statements, you have been asked to identify the activities that would be used to accumu-
late overhead costs for assignment to jobs and customers. Using your knowledge of a small

printing and copying fi rm (and some imagination), identify at least 12 activity cost pools
as the start of an activity-based costing system for Snap Prints Company.

Homework Answers

Answer #1
The activity cost pools
as the start of an activity-based costing system for Snap Prints Company are as follows:
Designing
Type of Printing (offset/let­ter press)

Hiring and training personnel

Copying
Accounting
Purchasing supplies and materials
Machine Proof requirements
Number of Colours
Delivery
Gumming
Type & size of cartons
Maintenance and repairs
Billing and collecting
Selling, promoting, and marketing
Hiring and training personnel
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