Siegel Company manufactures a product that is available in both a deluxe model and a reg- ular mill. The company has manufactured the regular model for years. The deluxe model was introduced several years ago to tap a new segment of the market. Since introduction of the deluxe model, the company's profils have steadily declined and management has become increasingly concerned about the accuracy of its costing system. Sales of the delene medelhave heen increasing rapidly Manufacturing overhead is assigned to products on the basis of direct labor-hours for the Current year, the company has estimated that it will incur $900,000 in manufacturing overhead cose and produce 5,000) units of the deluxe model and 40,000 units of the regular model. The dele Chapter 2 model requires two hours of direct labor time per unit, and the regular model requires one hour. Material and labor costs per unit are as follows Model Deluxe Regular $40 $25 $38 $19 Direct materials Direct labor Required 1. Compute the predetermined overhead rate using direct labor-hours as the allocation base Using this rate and other data from the problem, calculate the unit product cost of cach model 2. Management is considering using activity-hesed absorption conting to apply manufacturing over headost to products. The activity-based system would lune the following four activity cost poole Activity Cost Pool Purchasing Processing Scrap/rework Shipping Activity Moore Purchase ordered Machines Schrowork ordersted Number of shipments Estimated Overhead Cost 5204.000 182.000 379.000 135 000 5900.000 Activity Measure Purchase orders issued Machine hours Scraplework orders issued Number of shipments Expected Activity De Regular Total 200 400 600 20.000 15,000 35.000 1000 1,000 2.000 250 650 SOO Determine the predetermined overhead rate Sorcach of the foor activity cost pools 3. Using the predetermined overhead rates your computed in part2. do the following Compute the total amount of manufacturing overhead cost that would be applied to cach model using the activity-based absorption costing system. After these totals have been computed, determine the amount of manufacturing overhead cost per unit of each model b. Compute the unit product cost of cachmedel (direct material direct labor, and manufac- turing overhead) 4. From the data you have developed in parts (1) through 3, identify factors that may account for the company's declining profits