Problem 5-46 Activity-Based Costing; Cost Analysis (LO 5-1, 5-2,5-4,5-5, 5-7) Ontario, Inc., manufactures two products, Standard and Enhanced, and applies overhead on the basis of direct-labor hours Anticipate overhead and direct-labor time for the upcoming accounting period are $800,000 and 25,000 hours, respectively. Information about the company's products follows. Standard: Estimated production volume, 3,000 units Direct-material cost, $25 per unit Direct labor per unit, 3 hours at $12 per hour Enhanced: Estimated production volume, 4,000 units Direct-material cost, $40 per unit Direct labor per unit, 4 hours at $12 per hour Ontario's overhead of $800,000 can be identified with three major activities, order processing ($150,000), machine processing ($560,000), and product inspection ($90,000). These activities are driven by number of orders processed, machine hours worked, and inspection hours, respectively. Data relevant to these activities follow Machine Hours Inspection Check my wo Standard Enhanced Total Orders Processed 300 200 500 Machine Hours Worked 18,000 22, eee 40,000 Inspection Hours 2,000 8,000 10, Top management is very concerned about declining profitability despite a healthy increase in sales volume. The decrease in income is especially puzzling because the company recently undertook a massive plant renovation during which new, highly automated machinery was installed-machinery that was expected to produce significant operating efficiencies Required: 1. Assuming use of direct-labor hours to apply overhead to production, compute the unit manufacturing costs of the Standard and Enhanced products If the expected manufacturing volume is attained. 2. Assuming use of activity-based costing, compute the unit manufacturing costs of the Standard and Enhanced products if the expected manufacturing volume is attained. 3. Ontario's selling prices are based heavily on cost. a. By using direct-labor hours as an application base, which product is overcosted and which product is undercosted? Calculate the amount of the cost distortion for each product. b. Is it possible that overcosting and undercosting (e. cost distortion) and the subsequent determination of selling prices are contributing to the company's profit woes? Complete this question by entering your answers in the tabs below. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3A Reg 3B Assuming use of direct labor hours to apply overhead to production, compute the unit manufacturing costs of the Standard and Enhanced products if the expected manufacturing volume is attained. Standard Enhanced Manufacturing cost per unit Req2 > Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Reg 3B Assuming use of activity-based costing, compute the unit manufacturing costs of the Standard and Enhanced products if the expected manufacturing volume is attained. Standard Enhanced Manufacturing cost per unit Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Rel 3A Req 3B By using direct-labor hours as an application base, which product is overcosted and which product is unde the amount of the cost distortion for each product. Standard Enhanced per unit per unit Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3A RAA 3B Is it possible that overcosting and undercosting (ie, cost distortion) and the subsequent determination of selling prices are contributing to the company's profit woes? Yos O No