** PLEASE LABEL EACH PART CORRECTLY ** Equity Bank operates in a very competitive marketplace, using a traditional labor-hour-based system to determine the cost of processing its mortgage loans. Recantly, the firm axplored a switch to activity-based costing to determine the wisdom of its previous ways. The following information is aualable: Two loan applications, among many others, were originated and closed during the year. Loan number 7936 consumed 3.5 hours in loan underwriting and 1.5 hours in loan closure, for a total of 5.0 hours. Loan number 84.25 also required 5.0 hours of time, subdivided as follows: 2.0 hours in loan underwriting and 3.0 hours in loan closure. Required: A. Use an activity-based-costing system and determine the cost of processing, underwriting, and closing the two loan applications. (4 marks) B. Determine the cost of processing the two loans if Equity uses the traditional labor-hour-based system. Conversations with management found that, on average, each application took nine labor hours of processing time, excluding underwriting and closure. (2 marks) C. Is Equity making a mistake by continuing to use a traditional system that is based on an average labor cost per hour? Why? ( 2 marks) ** PLEASE LABEL EACH PART CORRECTLY ** Equity Bank operates in a very competitive marketplace, using a traditional labor-hour-based system to determine the cost of processing its mortgage loans. Recantly, the firm axplored a switch to activity-based costing to determine the wisdom of its previous ways. The following information is aualable: Two loan applications, among many others, were originated and closed during the year. Loan number 7936 consumed 3.5 hours in loan underwriting and 1.5 hours in loan closure, for a total of 5.0 hours. Loan number 84.25 also required 5.0 hours of time, subdivided as follows: 2.0 hours in loan underwriting and 3.0 hours in loan closure. Required: A. Use an activity-based-costing system and determine the cost of processing, underwriting, and closing the two loan applications. (4 marks) B. Determine the cost of processing the two loans if Equity uses the traditional labor-hour-based system. Conversations with management found that, on average, each application took nine labor hours of processing time, excluding underwriting and closure. (2 marks) C. Is Equity making a mistake by continuing to use a traditional system that is based on an average labor cost per hour? Why? ( 2 marks)