Question

The Adam Manufacturing Company in Rochester, Minnesota, assembles and tests electronic components used in smart phones. Consider the following data regarding component T24 (amounts are per unit):
Direct materials cost ........ $ 83.00
Direct labor cost .......... 16.00
Activity-based costs allocated .... ?
Total manufacturing product cost .. ?
The activities required to build the component follow:
Requirements
1. Complete the missing items for the two tables.
2. Why might managers favor this ABC system instead of Adam’s older system, which allocated all manufacturing overhead costs on the basis of direct labor hours?


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  • CreatedJune 15, 2015
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