Activity$-$based costing and product cost distortion

Crenshaw Inc. is considering a change to activity$-$based product costing. The company produces two products, cell phones and tablet PCs$,$ in a single production department. The production department is estimated to require $4,000$ direct labor hours. The total indirect labor is budgeted to be $$486,400.$

Time records from indirect labor employees revealed that they spent $40\%$ of their time setting up production runs and $60\%$ of their time supporting actual production.

The following information about cell phones and tablet PCs was determined from the corporate records:

Product Number of

Setups Direct Labor

Hours Units

Cell phones $5002,00076,000$

Tablet PCs $1,1002,00076,000$

Total $1,6004,000152,000$

If required, round your answers to the nearest cent.

a$.$ Determine the indirect labor cost per unit allocated to cell phones and tablet PCs under a single plantwide factory overhead rate system using the direct labor hours as the allocation base.

Cell phones fill in the blank $1$ of $2$$

per unit

Tablet PCs fill in the blank $2$ of $2$

per unit

b$.$ Determine the budgeted activity costs and activity rates for the indirect labor under activity$-$based costing. Assume two activities$$one for setup and the other for production support.

Activity Budgeted Activity Cost Activity Rate

Setup fill in the blank $1$ of $4$$

fill in the blank $2$ of $4$$

per setup

Production support fill in the blank $3$ of $4$$

fill in the blank $4$ of $4$$

per direct labor hour

c$.$ Determine the activity cost per unit for indirect labor allocated to each product under activity$-$based costing.

Cell phones fill in the blank $1$ of $2$$

per unit

Tablet PCs fill in the blank $2$ of $2$

per unit