(20 pts) 4. For many years, Vincent Company manufactured a single product called a mono- relay. Then three years ago, the company automated a portion of its plant and at the same time introduced a second product, called a bi-relay, which has become increasingly popular. The bi-relay is a more complex product, requiring one hour of direct labor time per unit to manufacture and extensive machining in the automated portion of the plant. The mono-relay requires only 0.75 hour of direct labor time per unit and only a small amount of machining. Manufacturing overhead costs are currently assigned to products based on direct labor-hours. Despite the growing popularity of the company's new bi-relay, profits have been declining steadily. Management is beginning to believe that there may be a problem with the company's costing system. Material and labor costs per unit are as follows: Mono Direct materials Direct labor (0.75 hour and 1.0 hour @ $12 per hour) Relay $35 $9 Bi Relay $48 $12 Management estimates that the company will incur $1,000,000 in manufacturing overhead costs during the current year and 40,000 units of the mono-relay and 10,000 units of the bi-relay will be produced and sold. Management is considering using activity-based costing to apply manufacturing overhead cost to products for external financial reports. The activity-based costing system would have the following four activity cost pools. Activity Cost (and Activity Measure) Estimated Cost Mono Bi Total Relay Relay Maintaining parts inventory (number of part types) $ 180,000 Processing purchase orders (number of orders) 90,000 Quality control (number of tests) 230,000 Machine-related (machine-hours) 500.000 Total overhead cost $1.000.000 225 75 150 1,000 800 200 5,750 2,500 3,250 10,000 4,000 6,000 Required: a) Determine the unit product cost for each product using the traditional costing system. b) Determine the unit product cost for each product using the activity-based costing system. c) Explain the difference in the costs for the two products for the two different methods, the traditional costing system and the activity-based costing system