Telecom Company produces a cell phone that sells for $150, and a smart phone that sells for $350. Last year, total overhead costs of $550,000 were allocated based on direct labor hours. Atotal of 12,000 direct labor hours were required last year to build 6,000 cell phones (2 hours per unit), and 10,000 direct labor hours were required to build 2,000 smart phones {5 hours per unit).Total direct labor and direct materials costs for last year were: Cell Phone Smart Phone Direct materials $2?0,000 $160,000Direct labor 300,000 200,000 Management of Telecom Company would like to use activity-based costing to allocate overheadrather than using one plantwide rate based on direct labor hours. The following estimates are forthe activities and related cost drivers identified as having the greatest impact on overhead costs. 3) Estimated Cost Estimated Driver ActivityOverhead Cell Smart Activity Cost Driver Costs Phone Phone TotalProduction Number of runs production runs $200,000 20 5 25Quality Inspection inspections hours 150,000 600 1,400 2,000Packaging and Number of units shipping shipped 200,000 6,000 2,000 8,000 Total $550,000 (1) Calculate the direct materials cost per unit and direct labor cost per unit for each
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