Meg Co. uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. Last year Mag Co. incurred $155,500 in actual manufacturing overhead cost. The Manufacturing Overhead account showed that overhead was underapplied by $12,500 for the year. If the predetermined overhead rate is $4.00 per direct labour hour, how many hours did the company work during the year? 35,750 hours 25,000 hours 32,400 hours 34,550 hours The following monthly data are available for the Auto Company and its only product, Product X1: Required: a) Management is contemplating the use of plastic piping rather than metal piping in Product X1. This change would reduce variable costs by $14/ unit. The company's marketing manager predicts that this would reduce the overall quality of the product and therefore would result in a decline in sales to a leval of 350 units per month. Should this change be made? b) Assume that Auto Company is currently selling 400 units of Product X1 per month. Management wants to increase sales and feels that this can be done by cutting the selling price by $20 per unit and increasing the advertising budget by $20,000 per month. Management believes that these actions will increase unit sales by 50%. Should these changes be