eBook Activity-based costing and product cost distortion Crenshaw 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 2,000 direct labor hours. The total indirect labor for the department a budgeted to be 5480,000. Time records from indirect labor employees revealed that they spent 30% of their time setting up production runs and 70% of their time supporting actual production The tollowing information about cell phones and tablet PCs was determined from the corporate records: Cell phones Tablet PCs Total Number of Setups Direct Labor Hours Units 1,200 1,000 80,000 2,800 1,000 1 + 4,000 2,000 80,000 160,000 If required, round all per unit 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 per unit per unit b. Determine the budgeted activity costs and activity rates for the indirect labor under activity-based costing. Assume two activities--one for stop and the ather for production support. Setup Budgeted Activity Cost Activity Rate per setup Previoua Next And for Greifing eBook Tablet PCs Total 2,800 4,000 1,000 2,000 80,000 160,000 If required, round all per unit 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 S Tablet PCs per unit 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. Setup Budgeted Activity Cost Activity Rate per setup per direct labor hour Production support 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 is consumed by the products in a different ratio from the direct labor The receive a larger portion of the setia actesty est. The costing method property allocates the setup-related activity so that the L equal for each product, the adocated indet allocates overhead only on the basis of direct labor hours. Since the direct labor hours labor will alse