The Alexander Manufacturing Company in Rochester, Minnesota, assembles and tests electronic components used in smartphones. Consider the following data regarding component T24 (amounts are per unit): 

Direct materials cost ...................................................... $ 81.00 

Direct labor cost ................................................................. 21.00 

Activity-based costs allocated ................................................? 

Total manufacturing product cost........................................ ?

The activities required to build the component follow: 

Requirements 

1. Complete the missing items for the two tables. 

2. Why might managers favor this ABC system instead of Alexander’s older system, which allocated all manufacturing overhead costs on the basis of direct labor hours?

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Activity Start station Dip insertion Manual insertion Wave solder Backload Test Defect analysis Total activity-based costs Allocation Base Number of raw component chassis Number of dip insertions Number of manual insertions Number of components soldered Number of backload insertions Number of testing hours Number of defect analysis hours 3 ? Cost Allocated to Each Unit $ 1.50 0.50 0.40 1.50 ? 60.00 ? 13 X X X 3 X 7 X 0.39 X 0.10 X = = $ 4.50 14.50 $ ? 4.50 2.80 ? 4.00 ?