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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
Activitybased costing and product cost distortion
Crenshaw Inc. is considering a change to activitybased product costing. The company produces two products, cell phones and tablet PCs in a single production department. The production department is estimated to require direct labor hours. The total indirect labor is budgeted to be $
Time records from indirect labor employees revealed that they spent of their time setting up production runs and of their time supporting actual production.
The following information about cell phones and tablet PCs was determined from the corporate records:
tabletableNumber ofSetupstableDirect LaborHoursUnitsCell phones,Tablet PCsTotal
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 $ per unit
Tablet PCs per unit
b Determine the budgeted activity costs and activity rates for the indirect labor under activitybased costing. Assume two activitiesone for setup and the other for production support.
Budgeted Activity Cost
Activity Rate
tableSetup$$per setupProduction support,$$direct labor hour
c Determine the activity cost per unit for indirect labor allocated to each product under activitybased costing. Cell phones : per unit
Tablet PCs per unit
d Why are the perunit allocated costs in a different from the perunit activity cost assigned to the products in c
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