4-A4 Activity-Based Costing in an Electronics Company The wireless phone manufacturing division of a consumer electronics company uses activity-based costing. For simplicity, assume that its accountants have identified only the following three activities and related cost drivers for indirect production costs: Activity Cost Driver Materials handling Direct-materials cost Engineering Engineering change notices Power Kilowatt hours 60 CHAPTER 4 COST MANAGEMENT SYSTEMS AND ACTIVITY-BASED COSTING 175 Three types of cell phones are produced: Senior, Basic, and Deluxe. Direct costs and cost-driver activity for each product for a recent month are as follows: Senior Basic Deluxe Direct-materials cost 525,000 $ 60,000 $135.000 Direct-labor com $14.546 5 3,762 $ 6,712 Kilowat hours 230,000 220,000 100.000 Engineering change notices 21 20 Indirect production costs for the month were as follows: Materials handling $ 15.400 Engineering 99.000 Power 11.000 Total indirect production cou $125.400 I. Compute the indirect production costs allocated to each product with the ABC system. 2. Suppose all indirect production costs had been allocated to products in proportion to their direct labor costs. Compute the indirect production costs allocated to each product. 3. In which product costs, those in requirement or those in requirement 2. do you have the most confidence? Why