Activity-Based Costing and Product Cost Distortion 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 $580,800. 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 productiorn The following information about cell phones and tablet PCs was determined from the corporate records: Number of Setups 1,600 800 2,400 Direct Labor Units Cell phones Tablet PCs Total Hours 2,000 2,000 4,000 88,000 88,000 176,000 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 290,000 X per unit 88,000 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 Previous Next Check My Work 3 more Check My Work uses remaining 4:58 PM 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 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 290,000 X per unit 88,000 X per unit other for production support. Budgeted Activity Cost S 348,000X 232,000|X Activity Rate 176 X per setup 58 X per direct labor hour Setup . Production support ) c. Determine the activity cost per unit for indirect labor allocated to each product under activity-based costing. Cell phones 255,200 | X per unit Tablet PCs S(88,000 | X 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 setup activityis consumed by the products in a different ratio from the direct labor. The ctivity-based costing method results in the product with the larger- number of setups receiving a larger portion of the setup activity cost. The single rate system allocates overhead only on the basis of direct labor hours. Since the direct labor hours are equal for each product, the allocated indirect labor will also be V equal. Check My Work 3 more Check My Work uses remaining Previous Next 4:58 PM 99+ 3/13/2019 2