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(Solved) (Latest ver. Aug 2020) - Manufacturing Overhead Allocation

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The percentages of product costs comprised by direct materials, direct labor, and manufacturing overhead for three companies are as follows

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 29
Manufacturing overhead 9

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

 







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