Question
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
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 3,750 direct labor hours. The total indirect labor is budgeted to be $375,000.
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:
Number of Setups | Direct Labor Hours | Units | |
Cell phones | 600 | 1,875 | 93,750 |
Tablet PCs | 1,400 | 1,875 | 93,750 |
Total | 2,000 | 3,750 | 187,500 |
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* If required, round all per-unit answers to the nearest cent. |
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