Question: The Electronics Manufacturing Department of Best Gadgets uses ABC to

The Electronics Manufacturing Department of Best Gadgets uses ABC to allocate all of its conversion costs (direct labour and manufacturing overhead). The company assembles and tests electronic components used in handheld video phones. Consider the following data regarding component T24:
Direct materials cost.................................................................................. $44.00
Direct labour cost...................................................................................... 32.00
Manufacturing overhead allocated............................................................ ?
Manufacturing product cost...................................................................... $ ?
The activities required to build the component follow:
Requirements
1. Fill in the blanks in both the opening schedule and the list of activities.
2. Why might managers favour this ABC system instead of the older system, which allocated all conversion costs on the basis of direct labour?

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  • CreatedApril 30, 2015
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