Apply activity cost allocation rates (Learning Objective 2)

The Electronics Manufacturing Department of Imagine uses ABC to allocate all of its conversion costs (direct labor and manufacturing overhead). The company assembles and tests electronic components used in handheld video phones. Consider the following data regarding component T24:

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 favor this ABC system instead of the older system, which allocated all conversion costs on the basis of direct labor?

$81.00 Direct materials cost... Activity costs allocated....... Manufacturing product cost. $