The percentages of product costs comprised by direct materials, direct labor, and manufacturing overhead for three companies are as follows:
Company A Company B Company C
Direct materials 7% 21% 42%
Direct labor 13 42 49
Manufacturing 80 37 9
100% 100% 100%
Direct labor and direct materials are easily traced to products. Use of ABC to trace costs to activities and then to ...
Solution explains which of the given three companies can probably improve its product costing accuracy most by converting to activity-based costing (ABC).