To this point we have assumed the Magnificent Modems produced only one type of modem. Suppose instead we assume the company produces several different kinds of modems. The production process differs for each type of product. Some require more setup time than others, they are produced in different batch sizes, and they require different amounts of indirect labor (supervision). Packaging and delivery to customers also differs for each type of modem. Even so,
Magnificent Modems uses a single allocation base (number of units) to allocate overhead costs.
Required
Write a brief memo that explains how Magnificent Modems could benefit from an ABC costing system.