A company uses a longrun time horizon to price its product, an electronic component used in aircraft. To produce a normal production run for a year of 100,000 units direct materials are $90,000; direct labour is $180,000; and, rent on leased equipment is $106,000 per year. Currently rework is running at 4% of production, after testing. The company has the capacity to test 10 units per hour. Manufacturing Overhead has two cost drivers: testing (cost driver is testing hours at $2.50 per hour); and, rework (cost driver is units reworked at $80 per unit reworked).

Calculate current total manufacturing costs for 100,000 units.

A.

$396,000

B.

$721,000

C.

$401,000

D.

$376,000

E.

$320,000