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

Required:

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.
	Complete the Activity Tables for cell phones and tablets:
b.	Determine the budgeted activity costs and activity rates for the indirect labor under activity-based costing. Assume two activitiesone for setup and the other for production support.*
c.	Determine the activity cost per unit for indirect labor allocated to each product under activity-based costing.*
d.	Why are the per-unit allocated costs in (a) different from the per-unit activity cost assigned to the products in (c)?

* If required, round all per-unit answers to the nearest cent.

Starting Question

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.

Single plantwide factory overhead rate per dlh

Cell phones	per unit
Tablet PCs	per unit

Activity Table - Cell Phones

Complete the Activity Table for cell phones.

	b. Determine the activity rate for cell phones activity. Enter these rates in the Activity Rate column.*
	c. Use the activity rates in (a) to determine the total and per-unit activity costs associated with cell phones product.*
	* If required, round all per-unit answers to the nearest cent.

	Cell Phones
Activity	Activity-
	Base		Activity		Activity
	Usage	X	Rate	=	Cost
Setup	setups		/setup
Production support	dlh		/dlh
Total
Units
Activity cost per unit