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This study source was downloaded by 100000899641396 from CourseHero.com on 07-16-2025 16:39:12 GMT -05:00 https://www.coursehero.com/file/246629963/454314317-MELISSA-PRINTING-SHOPdocx/ Problem 2-52 ...


This study source was downloaded by 100000899641396 from CourseHero.com on 07-16-2025 16:39:12 GMT -05:00
https://www.coursehero.com/file/246629963/454314317-MELISSA-PRINTING-SHOPdocx/ Problem 2-52 Cost Identification and Analysis, Cost Assignment, Income Statement
Melissa Vassar has decided to open a printing shop. She has secured two contracts. One is a 5-year
contract to print a popular regional magazine. This contract calls for 5,000 copies each month. The
second contract is a 3-year agreement to print tourist brochures for the state. The state tourist office
requires 10,000 brochures per month.
Melissa has rented a building for $1,400 per month. Her printing equipment was purchased for
$40,000 and has a life expectancy of 20,000 hours with no salvage value. Depreciation is assigned to a
period based on the hours of usage. Melissa has scheduled the delivery of the products so that two
production runs are needed. In the first run, the equipment is prepared for the magazine printing. In
the second run, the equipment is reconfigured for brochure printing. It takes twice as long to
configure the equipment for the magazine setup as it does for the brochure setup. The total setup
costs per month are $600.
Insurance costs for the building and equipment are $140 per month. Power to operate the printing
equipment is strongly related to machine usage. The printing equipment causes virtually all the
power costs. Power costs will run $350 per month. Printing materials will cost $0.40 per copy for the
magazine and $0.08 per copy for the brochure. Melissa will hire workers to run the presses as needed
(part-time workers are eas

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