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Check the attachments for a better view of the questions. [The following information applies to the questions displayed below.] For many years, Yelena Company manufactured

Check the attachments for a better view of the questions.

[The following information applies to the questions displayed below.]

For many years, Yelena 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 that has become increasingly popular. The Bi-Relay is a more complex product, requiring 1.00 hour of direct labor time per unit to manufacture and extensive machining in the automated portion of the plant. The Mono-Relay requires only 0.50 hour of direct labor time per unit and only a small amount of machining. Manufacturing overhead costs are currently assigned to products on the basis of 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. Materials and labor costs per unit are given below:

Mono-RelayBi-Relay
Direct materials$70.00$85.00
Direct labor (0.50 hour and 1.00 hour @ $19.00 per hour)$9.50$19.00

Management estimates that the company will incur $758,400 in manufacturing overhead costs during the current year and 18,000 units of the Mono-Relay and 7,000 units of the Bi-Relay will be produced and sold.

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