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?

Transcribed Image Text:

Cost Allocated Activity Start statio Allocation Base Number of raw component chassis Number of dip insertions to Each Unit 8 x $ 1.80 $14.40 ?x $ 0.4016.00 Dip insertion... Manual insertion..Number of manual insertions Wave solder Backload Test. Defect analysis Total.. 18 x 1.60 Number of components soldered Number of backload insertions Standard time each component is in test activty 0.70 x $110.00 Standard time for defect analysis and repair 50 x $ 2.20= 15.40 15 $ ?= 5.10 = 11.00