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Mott Manufacturing allocates factory overhead using one cost pool w/ direct labor hours as the allocation base. Motr has 2 production dept, P1 and P2. The new accountant at Mott estimates that next year, the total factory overhead costs will be $5,000,000 and approcimately 500,000 direct labor houts will be worked. The accountant also estimates P1 wiill use 150,000 direct labor hours and there will be about $3,000,000 in overhead cost in P1. P2 will use 350,000 direct labor hours and there will be $2,000,000 in overhead cost i P2. Mott has two products, A1 and B1. It takes two direct labor hours in P1 and three direct hours in P2 to complete one unit of A1. It takes one direct labor hour in P1 and four direct labor hours in P2 to compete one unit of B1 Which product will be undercost and which will be overcost with the one-cost-pool system? Support your answer with apporpriate calculations.
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