QUESTION 1 (25 marks) Nilam Sdn. Bhd. manufactures two products, Standard and Enhanced, and applies overhead on the basis of direct-labor hours. The anticipated overhead and direct labor time for the upcoming period is RM800,000 and RM25,000 hours respectively. The information about the company's products follows: Estimated production volume Direct material cost Direct labor per unit Standard 3,000 units RM 25 per unit 3 hours at RM12 per hour Enhanced 4,000 units RM 40 per unit 4 hours at RM12 per hour Nilam's overhead cost of RM 800,000 can be identified with three major activities as follows: Activities Order Processing Machine Processing Product Inspection Overhead Cost RM150,000 RM560,000 RM90,000 Cost Pool No. of order processed Machine hours worked Inspection hours Data relevant to these activities follow: Standard Enhanced Total Order processed 300 200 500 Machine hours worked 18,000 22.000 40,000 Inspection Hours 2,000 8,000 10,000 Top management is very concerned about declining profitability despite a healthy increase in sales volume. The decrease in income is especially puzzling because the company recently undertook massive plant renovation during which new, highly automated machinery was installed- machinery that was expected to produce significant operating efficiencies. Required: a) Compute the manufacturing costs per unit for Standard and Enhanced products using direct-labor hours to apply overhead to production. (11 marks) (CLO3:PLO3:03) b) Compute the manufacturing costs per unit for Standard and Enhanced products using activity-based costing (12 marks) (CLO3:PLO3:C3) c) Nilam's selling prices are based heavily on cost. State the which product is over-costed and which product is under-costed by using direct labor (2 marks) (CLO3:PLO3:04)