LEARNING ACTIVITY 1 The Zalucki Company plans to use ABC method to determine its product costs. It presently uses a single plant wide factory overhead rate for allocating overhead to products, based on direct labor hours. The total factory overhead cost is as follows: Department Production Support Factory Overhead 1,225,000 Production (FOH only) Total Cost 175,000 1,400,000 The company determined that it performed four major activities in the Production Support Department. These activities, along with their budgeted costs, are as follows: Production Support Activities Setup Production Control Quality Control Materials Management Total Budgeted Costs 428,750 245,000 183,750 367,500 1,225,000 13 Xerez Singson posted a new assignment: ABC METHOD Zalucki Company estimated the following activity base usage and units produced for each of its three products: TV Number of Units 10,000 Computer 2,000 Cellphone Total 50,000 62,000 Direct Labor Hours 25,000 10,000 140,000 175,000 Setups 80 40 5 125 Production Orders 80 40 5 125 Inspections 35 40 0 75 Material Requisition 320 400 30 750 REQUIRED: 1. Determine the FOH for TV, Computer and Cellphone under the single plant wide factory overhead rate method. Use direct labor hours as the activity base 2. Determine the factory overhead costs for TV, Computer and Cellphone under activity- based costing 3. Which method provides more accurate product costing? Why?