< Activity-Based Costing and Product Cost Distortion Digital Storage Concept 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 $563,200. Time records from indirect labor employees revealed that they spent 60% of their time setting up production runs and 40% of their time supporting actual production. The following information about cell phones and tablet PCs was determined from the corporate records: Number of Direct Labor Units Setups Hours Cell phones 1,600 2,000 64,000 Tablet PCs 800 2,000 64,000 Total 2,400 4,000 128,000 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 Tablet PCs 2.8 X per unit 2.8 X 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. Budgeted Activity Cost Activity Rate Setup Production support per setup per direct labor hour c. Determine the activity cost per unit for indirect labor allocated to each product under activity-based costing. Check My Work All work saved. Previous Save and Exit Submit Assignment for Grading ? It 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 hour the allocation base. Cell phones Tablet PCs 2.8 X per unit 2.8 X 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. Budgeted Activity Cost Activity Rate Setup Production support per setup per direct labor hour c. Determine the activity cost per unit for indirect labor allocated to each product under activity-based costing. Cell phones Tablet PCs per unit 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 because costing method results in the product with the allocates overhead only on the basis of direct labor hours. Since the direct labor hours is consumed by the products in a different ratio from the direct labor. The number of setups receiving a larger portion of the setup activity cost. Th equal for each product, the alloca indirect labor will also equal. Feedback Check My Work a. Calculate: Total Indirect labor costs + Total hours = Rate Rate x Hours per product = Indirect labor cost per product: Indirect labor cost per product + Units = Cost per unit Check My Work Previous