McAllister, Inc. employs a normal costing system. The following information pertains to the year just ended. •Total manufacturing costs were $1,300,000. •Cost of goods manufactured was $1,265,000. •Applied manufacturing overhead was 30 percent of total manufacturing costs. •Manufacturing overhead was applied to production at a rate of 80 percent of direct-labor cost. •Work-in-process inventory on January 1 was 75 percent of work-in-process inventory on December 31. 1. Compute the total direct-labor cost for the year.
2. Calculate the total cost of direct material used during the year.
3. Compute the value of the company’s work-in-process inventory on December 31.

Activity-based costing (abc) is not truly a cost collection mechanism as much as it is an inventory valuation method. the main purpose for implementing an activity-based cost system is to try to overcome some of the cost distortions that occur in traditional costing from product differences when there are variations in size and complexity. however, one of the disadvantages of utilizing abc is that the additional information gathering necessary to implement costing with that level of detail might be beyond the reach of some companies with resource or financial constraints. with this in mind, what kinds of industries or companies do you think would benefit most from using activity-based costing and why? in designing or modifying an accounting system to capture appropriate costs for abc, what considerations do you think would need to be made?