Activity-Based Department Rate Product Costing and Product Cost Distortions Big Sound Inc. manufactures two products: receivers and loudspeakers. The factory overhead incurred is as follows: The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows: The activity-base usage quantities and units produced for the two products follow: 1. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is $420,000 and $294,000 for the Subassembly and Final Assembly departments, respectively. Final Assembly Department $ X per direct labor hour 4. Determine the total and per-unit cost assigned to each product under activity-based costing. Round the per unit amounts to the nearest whole cent. 5. Comment on the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate and activity-based costing methods. The activity-based overhead allocation reveals that loudspeakers are costly on a per-unit basis than are the receivers. The multiple production department rate method determines that the per-unit factory overhead is for the two products. The multiple production department factory overhead rate method distort the unit costs because all factory overhead is assumed to be to direct labor hours. Loudspeakers have setups and inspection activities than do receivers. Thus, loudspeakers have activity costs per unit than do receivers