If anyone could help me with this problem I would greatly appreciate it. I have tried and read the book and can not find out how to do this problem. Please Help!!




Company A Company B Company C
Direct Materials 7% 21% 42%
Direct Labor 13 42 49
Manufacturing
Overhead 80 37 9

Based on the information which company would improve its product costing by converting to activity based costing? Why?

A
Explain your answer. Advocates maintain that ABC can provide management with a more accurate assignment of overhead to products and, therefore, a better understanding of profitability. Direct labor and materials costs are easier to allocate and track than manufacturing overhead costs.