Question: The Abram Manufacturing Company in Rochester Minnesota assembles and tests

The Abram Manufacturing Company in Rochester, Minnesota, assembles and tests electronic components used in handheld video phones. Consider the following data regarding component T24 (amounts are per unit):
Direct materials cost ......... $ 81.00
Direct labor cost ............ 21.00
Activity-based costs allocated ..... ?
Total manufacturing product cost ..... ?
The activities required to build the component follow:

1. Complete the missing items for the two tables.
2. Why might managers favor this ABC system instead of Abram’s older system, which allocated all manufacturing overhead costs on the basis of direct laborhours?

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  • CreatedJanuary 16, 2015
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