DreamyCompany uses direct labor hours toallocateoverhead to all of its jobs. It allocates overhead costs of $15,200 to two different jobs as follows: Job 1: (10 hours) = $7,600; Job 2: (10 hours) = $7,600 The production process for Job 2 was then automated. Now Job 2 requires only 2 hours of direct labor but 4 hours of mechanical processing. As a result, total overhead increases to $21,300. Select the incorrect statement from the following.

Please explain the answer! thanks!

Multiple Choice

• While the actual processing of Job 1 was not affected by automation, it received an increase of $10,150 in its overhead allocation.
• The increased overhead costs associated with automation should be allocated to both jobs.
• Automation and the costing system used by the company cause the cost of Job 1 to be significantly overstated.
• The use of machine hours as the allocation base would significantly improve the overhead cost allocations.