Activity$-$based costing and product cost distortion labor is budgeted to be $$324,000.$

Time records from Indirect labor employees revealed that they spent $605$ of their time setting up production runs and $40\%$ of their time supporting actual praduction.

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

$\backslash$table$[[,\backslash$table$[[$Number of$],[$Setups$]],\backslash$table$[[$Direct Labor$],[$Hours$]],$Units$],[$Cell phones,$1,600,2,000,60,000],[$Tablet PCs$,800,2,000,60,000],[$Total$,2,400,4,000,120,000]]$

If required, round your answers to the nearest cent.

a$.$ Detemine 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 $1$

Tablet PCS $=$perunit

b$.$ Determine the budgeted activity costs and activity rates for the Indirect labor under act$/$vity$-$based costing. Assume two activiltes$-$one for setup and the other for production support.

$\backslash$table$[[,$Budgeted Activity cost,Activity Rate,$],[$Setup$,$$$,$$$,$per setup$],[$Production support,$$,$$$,$per direct labor hour$]]$

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

Cell phones: per unit

Tablet PCS per unit

d$.$ Why are the per$-$unit allocated costs in $($a$).$different from the per$-$unit activity cost assigned to the products in $($c$)?$

The per$-$unit indirect labor costs in $($a$)$ are distorted becaus:

Is consumed by the products in$.$ a different ratio from the direct labor. The $-$

costing method results in the product with the number of setups recelving a larger portion of the setup activity cost. The allocates overhead only on the basis of direct labor hours. Since the direct labor hours equal for each product, the allocated indirect labor will also equal.