Alloy Technology uses ABC to allocate all of its manufacturing overhead. Alloy's Digital Department, which assembles and tests digital processors, reports the following data regarding processor G27:

Direct materials cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $56.00

Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $49.00

Manufacturing overhead allocated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?

Manufacturing product cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?

1. Fill in the blanks in both the opening schedule and the list of activities.
2. Why might managers favor this ABC system instead of the older system that allocated all manufacturing overhead costs on the basis of direct labor?

Transcribed Image Text:

Cost Allocated to Each Board Allocation Base Start station Dip insertion Manual insertion Wave solder Backload Test Defect analysis Total Number of processor boards Number of dip insertions Number of manual insertions Number of processor boards soldered Number of backload insertions Standard time each processor board is in test activity (hr.) Standard time for defect analysis and repair (hr.) 6 xS 0.70 S 4.20 20 x$ 0.40 9xS? 5.40 6 xS 6.40- 38.40 ? $ 0.60= 4.20 0.14 × $70.00= 0.17×$ ?=10.20