Urban Elite Cosmetics has used a traditional cost accounting system to apply quality-control costs uniformly to all products at a rate of 17 percent of direct-labor cost. Monthly direct-labor cost for Satin Sheen makeup is $104,000. In an attempt to more equitably distribute quality-control costs, management is considering activity-based costing. The monthly data shown in the following chart have been gathered for Satin Sheen makeup. Quantity of Driver Activity Cost Pool Cost Driver Pool Rates for Satin Sheen Incoming material inspection Type of material $ 29.00 per type 29 types In-process inspection Number of units 0.31 per unit 39,000 units Product certification Per order 158. 00 per order 55 orders Required: 1. Calculate the monthly quality-control cost to be assigned to the Satin Sheen product line under each of the following product- costing systems. a. Traditional system, which assigns overhead on the basis of direct-labor cost. b. Activity-based costing. 2. Does the traditional product-costing system overcost or undercost the Satin Sheen product line with respect to quality-control costs? By what amount? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the monthly quality-control cost to be assigned to the Satin Sheen product line under the Traditional product-costing system and the Activity-based product-costing system. Assigned Cost Traditional system $ 17,680 b. Activity-based costing $ 21,621 Does the traditional product-costing system overcost or undercost the Satin Sheen product line with respect to quality-control costs? By what amount? Traditional system undercosts by $ 3,941I Ontario, lnc.. manufactures two products. Standard and Enhanced. and applies overhead on the basis of directlabor hours. Anticipated overhead and direct-labor time for the upcoming accounting period are $800,000 and 25,000 hours. respectively. Information about the company's products follows. Standard: Estimated production volume. 3,006 units Direct-material cost, $25 per unit Direct Labor per unit. 3 hours at $12 per hour Enhanced: Estimated production volume, 4,aoa units Directmaterial cost, $43 per unit Direct 'Labor per unit. 4 hours at $12 per hour Ontario's overhead of $800.000 can be Identified with three major activities: order processing {$150000}. machine processing [$560,000], and product inspection ($90,000). These activities are driven by number of orders processed, machine hours worked, and inspection hours, respectively. Data relevant to these activities follow. Machine Orders Hou rs Ins pect ion Processed Worked Hours Standard 3m 18, ans 2, and Enhanced E 22.8% 3.9m Total 5% 4B. 8% 18, 009 Top management is very concerned about declining protability despite a healthy increase in sales volume. The decrease in income is especially puzzling because the company recently undertook a massive plant renovation during which new. highly automated machinery was installedmachinery that was expected to produce significant operating efficiencies. Required: 1. Assuming use of direct-labor hours to apply overhead to production, compute the unit manufacturing costs ofthe Standard and Enhanced products if the expected manufacturing volume is attained. 2. Assuming use of activitybased costing. compute the unit manufacturing costs of the Standard and Enhanced products if the expected manufacturing volume is attained. 3. Ontario's selling prices are based heavily on cost. a. Ely using direct-labor hours as an application base, which product is overcosted and which product is undercosted'? Calculate the amount of the cost distortion for each prod uct. b. Is it possible that overcosting and undercosting {i.e.. cost distortion} and the subsequent determination of selling prices are contributing to the compa ny's prot woes? Complete this question by entering your answers in the tabs below. Reg 2 Reg 3A Req SB ' Reql Assuming use of direct-labor hours to apply overhead to production, compute the unit manufacturing costs of the Standard and Enhanoed products if the expected manufacturing volume is attained. .. Tull-.1\". ._-.-..-.'-..'_i-. 1.1-. s $ Assuming use of activitybased costing, compute the unit manufacturing costs of the Standard and Enhanced products if the expected manufacturing volume is attained. Manufacturing cost per unit $ 181 $ 198 By using direct-labor hours as an application base, which product is overdosted and which product is undercosted? Calculate the amount of the cost distortion for each product. per unit Enhanced per un It Is it possible that overcosting and undercosting (i.e., oost distortion) and the subsequent determination of selling prices are contributing to the company's prot woes