Purchase Solution

Activity Based Costing

Not what you're looking for?

Ask Custom Question

Company A:
direct materials 7%
direct labor 13%
manufacturing overhead 80%

Company B
Direct materials 21%
direct labor 42%
manufacturing overhead 37%

Company C
direct materials 42%
direct labor 49%
manufacturing overhead 9%

Based on this information, which of the three companies would probably improve its product costing accuracy most by converting to Activity Based Costing (ABC) and explain why?

Activity based costing focuses on indirect costs such as overhead so I think it would be company A. Is this correct?

Purchase this Solution

Solution Summary

Evaluation of company performance based on Activity Based Costing

Solution Preview

You are correct. A is the right answer.

Activity Based Costing is an accounting system that assigns costs to products based on the resources they consume. The costs of all ...

Purchase this Solution

Free BrainMass Quizzes
Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.