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Activity-based costing (ABC)?
Company A Company B Company C
Direct materials 7% 21% 42% Direct labor 13 42 49 Manufacturing overhead 80 37 9 100% 100% 100% Based on this information, which of these three companies would probably improve its product costing accuracy most by converting to activity-based costing (ABC)? Explain your answer. Company A Overhead is too high. Less overhead and better materials, maybe increased labor |
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