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

Direct materials cost.................................................................................. $51.00

Direct labour cost...................................................................................... $30.00

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 MOH costs on the basis of direct labour?

Transcribed Image Text:

Cost Allocated to Each Unit Allocation Base Activity Start station Dip insertion Manual insertio Wave solder Backload Test Defect analysis......Standard time for defect analysis and repair Total Number of raw component chassis Number of dip insertions Number of manual insertions Number of components soldered Number of backload insertions Standard time each component is in test activity 2 x $ 1.30 2.60 × $ 0.40 = 12.00 12 x $ 0.80= x $1.40= 1.40 0.40 x $80.00 0.10 × 5.00