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Homework - Chapter 1 8 Activity - based costing and product cost distortion Crenshaw Inc. is considering a change to activity - based product costing.

Homework - Chapter 18
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 4,000 direct labor hours. The total indirect labor is budgeted to be $729,600.
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:
\table[[,\table[[Number of],[Setups]],\table[[Direct Labor],[Hours]],Units],[Cell phones,500,2,000,96,000],[Tablet PCs,1,100,2,000,96,000],[Total,1,600,4,000,192,000]]
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 $ q, per unit
Tablet PCs 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
\table[[Setup,$,,$,per setup],[Production support,$,,$,direct labor hour]]
c. Determine the activity cost per unit for indirect labor allocated to each product under activity-based costing. Cell phones : per unit
Tablet PCs 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)?
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