Miller Company makes two types of chairs. One of the chairs is a rocking chair. The other is a straight-back chair. Both chairs are made by hand. Miller Company uses a company-wide overhead rate that is based on direct labor hours to assign overhead costs to the two products. If Miller automates the production of straight-back chairs and continues to use direct labor hours as a company-wide allocation basis:
Rocking chairs will be overcosted. straight back chairs will be overcosted. rocking chairs will be undercosted. there should be no impact on unit cost.