Question $4.$ For many years, Thomson Company manufactured a single product called LEC $40.$ Then three years ago, the company automated a portion of its plant and at the same time introduced a second product called LEC $90$ that has become increasingly popular. The LEC $90$ is a more complex product, requiring $0\mathrm{.}80$ hours of direct labor time per unit to manufacture and extensive machining in the automated portion of the plant. The LEC $40$ requires only $0\mathrm{.}40$ hours of direct labor time per unit and only a small amount of machining. Manufacturing overhead costs are currently assigned to products on the basis of direct laborhours.

Despite the growing popularity of the company's new LEC $90,$ profits have been declining steadily. Management is beginning to believe that there may be a problem with the company's costing system. Direct material and direct labor costs per unit are as follows:

$\backslash$table$[[,$LEC $40,$LEC $90],[$Direct materials $...............................................................,$$$30\mathrm{.}00,$$$50\mathrm{.}00$