=+Annual overhead in the Semiconductor Division totals $400000, all fixed. Due to the high skill level necessary for the craftspeople, the Semiconductor Division’s capacity is set at 45000 hours per year.

One customer orders a maximum of 15000 Super-chips per year, at a price of $80 per chip. The rest of the Semiconductor Division’s capacity is devoted to the Okay-chip, for which there is unlimited demand at $12 per chip.

The Process Control Division produces only one product, a process control unit, with the following cost structure:

◗ direct materials (circuit board): $70

◗ direct manufacturing labour: $45 (3 hours × $15).

Fixed overhead costs of the Process Control Division are $80000 per year. The current market price for the control unit is $132 per unit.