The Gregory Manufacturing Company has two producing departments, machining and assembly. Mr. Gregory recently automated the machining department. The installation of a CAM system, together with robotic workstations, drastically reduced the amount of direct labor required. Meanwhile, the assembly department remained labor intensive. The company had always used one firm-wide rate based on direct-labor hours as the cost-allocation base for applying all costs (except direct materials) to the final products. Mr. Gregory was considering two alternatives: (1) continue using direct-labor hours as the only cost-allocation base, but use different rates in machining and assembly, and (2) using machine hours as the cost-allocation base in the machining department while continuing with direct-labor hours in assembly. Budgeted data for 20X0 are as follows: Data table Total cost (except direct materials) Machine hours Direct-labor hours Not applicable Machining 539,000 $ 77,000 11,000 Assembly 459,000 $ 34,000 Total 998,000 77,000 45,000 1. Suppose Gregory continued to use one firm-wide rate based on direct-labor hours to apply all manufacturing costs (except direct materials) to the final products. Compute the cost-application rate that would be used. 2. Suppose Gregory continued to use direct-labor hours as the only cost-allocation base but used different rates in machining and assembly. a. Compute the cost-application rate for machining. b. Compute the cost-application rate for assembly. 3. Suppose Gregory changed the cost accounting system to use machine hours as the cost-allocation base in machining and direct-labor hours in assembly. a. Compute the cost-application rate for machining. b. Compute the cost-application rate for assembly. 4. Three products use the following machine hours and direct-labor hours: Machine Direct-Labor Direct-Labor Hours in Hours in Hours in Machining Machining Assembly Product A 8.0 4.0 14.0 Product B 19.0 4.6 2.5 Product C 11.0 4.3 7.2 a. Compute the manufacturing cost of each product (excluding direct materials) using one firm-wide rate based on direct-labor hours. b. Compute the manufacturing cost of each product (excluding direct materials) using direct-labor hours as the cost-allocation base, but with different cost-allocation rates in machining and assembly. c. Compute the manufacturing cost of each product (excluding direct materials) using a cost-allocation rate based on direct-labor hours in assembly and machine hours in machining. d. Compare and explain the results in requirements 4a, 4b, and 4c