16 St. Lawrence Company is considering the adoption of an activity-based costing (ABC) system because the managers suspect that their traditional costing system distorts the product costs. This company produces and sells two products Generic and HiEnd. Their traditional costing system uses direct labor hours (DLHs) as the allocation base for manufacturing overhead cost. The production managers decided that major activities are Machine setups, Special Processing, and General factory and determined the costs for each activity. They also identified how many setups, MHs, and DLHs for each product requires. Product HiEnd Generic Price S 230 $ 150 $72.00 $44.00 DM DLHs/unit 2.0 10,000 80,000 UnitsTotal DLH 20,000 80,000 The wage rate per hour is: The company collected the data for ABC as follows: 20.00 Activity Cost Cost Driver or ActivityEstimated OH cost Machine setup Special processing General factory Measure # of setups Machine hours Direct-labor hours Total $462,000 550,000 375,000 $1,387,000 HiEnd 120 12,000 20,000 Total 180 20,000 100,000 Activity Measure # of setu Machine hours DLH Generic 60 8,000 80,000 Compared with the unit product cost calculated by the ABC system, what is the distortion (difference) created by the traditional costing system for HiEnd Product? A. Under the traditional costing system, the product is overcosted by B. Under the traditional costing system, the product is undercosted by C. Under the traditional costing D. Under the traditional costing system, the product is undercosted by E. None of the above S 71.30 per unit. S 71.30 per unit. S 43.56 per unit. S 43.56 per unit. system, the product is ov ercosted by