Mohammad's Company produces a part of which is used remote control cars for kids. The activity based costing system of the company have identified the following activity cost pools, measures and rates: Activity Cost Pool Activity Measures Activity Rate Order Size Number of direct labor - hours $10 per direct labor-hour Customer orders Number of customer orders $20 per customer order Product testing Number of testing hours $25 per testing hour Selling Number of sales calls $15 per sales call The company just completed three orders for 60 units from Huzaifa's Company. The order required 150 direct labor-hours, 8 hours of product testing and 3 sales calls. The Mohammad charges $60 per units as selling price; direct material costs $15 per unit, direct labor $10 per unit. Required: Allocate the overhead costs to Mohammad's Company for the order of Huzaifa's company and determine the customer margin. [ 8 Marks 1 What is meant by the term equivalent units of production when the weighted-average method is used? [2.5 Marks] Provide two reasons why overhead might be underapplied in a given year. [2.5 Marks]