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Different jobs undertaken by Colorscope place varying demand on company's resources. Company seems to have not charged its customers depending upon the demand on resources. For example : Job no. # 61001, 61101, 61401, 61701 and 61902 require different amount of time but they were not charged in the same proportion.
Table 1 ? Revenue Vs time
JOB # Pages Total Hours Revenue ($)
61001 16 93 9600
61101 16 58 12000
61401 16 59 7800
61701 16 70 8000
61902 16 75 12000
Therefore to ascertain the profitability of each job, two stage job costing system (ABC) is used.
i. 1st stage: Resource costs are allocated to cost pool using appropriate resource drivers...
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