Hakara Company uses direct labor cost as the allocation basis for allocating factory overhead to its products. Of late, the management of Hakara is feeling that switching over to an ABC system may improve the accuracy of product costs. The management has divided the total budgeted factory overhead cost into three activity cost pools for this purpose as given below: Cost allocation Cost pools Activity costs Cost allocation driver driver volume Machine setup $42,000 Setup hours 4.000 Materials handling $?8.000 Pounds of materials 20,000 Electric power $20,000 Kilowatt-hours 40,000 Budgeted Direct labor cost for the year for all products = $125,000 The following cost and activity information pertains to two of the many products (Alpha and Beta) manufactured by Hakara: ilp Beta Number of units budgeted to be produced 4,000 20,000 Budgeted DM cost for the product $42,000 $54,000 Budgeted DL cost for the product $24,000 $40,000 Number of setup hours budgeted 200 240 Pounds of materials budgeted 1,000 3.000 Kilowatthours budgeted 2,000 4.000 R_equired: a] 1lill'hat is the budgeted pro-determined overhead rate under the current costing system? b} Find the budgeted unit cost of production for Alpha and Beta under the current costing system c] Find the budgeted unit cost of production for Alpha and Beta under the proposed ABC system. Calculate the cost distortion introduced by the current costing system for both Alpha and Beta. Express your answer on a per unit basis d] as well as in percentage terms and in total dollar terms for the entire product line of Alpha and Beta. e) ls Beta underfover costed under traditional system? Give one reason for why it is underfover costed