intario, Inc., manufactures two products, Standard and Enhanced, and applies overhead on the basis of direct-labor hours. Anticipated verhead and direct-labor time for the upcoming accounting period are $800,000 and 25,000 hours, respectively. Information about he company's products follows. Standardt Bstinated preduction volure, 3,000 unitn Direct-material cost, $25 per unit Direct labor per unit, 3 bourb at $12 per houk Enhancedt Pstimated production volune; 4,000 tanite Direct-naterial cost, $40 per unit. Direat labor per unit, 4 hour at 512 per hoar Ontario's overhead of $800,000 can be identified with three major activities: order processing ( $150,000, machine processing ($560,000), and product inspection ($90,000). These activities are driven by number of orders processed, mochine hours worked, and inspection hours, respectively, Data relevant to these activities follow. Top management is very concerned about declining profitability despite a healthy increase in sales volume. The decrease in income is especially puzzling beceuse the company recently undertook a massive plant renovation during which new, highly autemated machinery was installed-machinery that was expected to produce significant operating efficiencios. Required: 1. Assuming use of direct-labor hours to opply ovemead to production, compute the unit manufacturing costs of the standard and Enhanced products if the expected manufacturing volume is attained. 2. Assuming use of actlvity based costing, compute the unit manufocturing costs of the Standard and Enhanced products if the expected manufacturing volume is attained. 3. Onterio's sewing prices are based heavily on cost. a. Ay using directibbor hours as an application base, which product is overcosted and which product is undercostod? Calculate the amount of the cost distortion for each product. b. Is it possible that overcosting and undercosting (ie., cost distortion) and the subsequent determination of seling prices are consributing to the company's profit woes