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    calloway's Avatar
    calloway Posts: 3, Reputation: 1
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    #1

    Jan 25, 2009, 10:23 AM
    Importance of Manufacuring Overhead Allocations
    The percentages of product cost comprised by direct materials direct labor and manufacturing over head

    Company A Company B Company C
    Direct materials 7% 21% 42%
    Direct labor 13 42 49
    Manufacturing overhead 80 37 9
    ;)
    Based on this information which of these 3 companies would probably improve its product costing accuracy most by converting to activity based costing (ABC).
    calloway's Avatar
    calloway Posts: 3, Reputation: 1
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    #2

    Jan 25, 2009, 10:27 AM

    I would think that company C would probably improve its product costing accuracy most. Because of the low percentage in the manufacturing overhead which would seem to me to be the least cost effectiveness with 9 %
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