ABC Versus ABM Whitaker Company produces two models of blenders for restaurants: the "Super Model" (priced at $398) and the "Special Model" (priced at $203). Recently, Whitaker has been losing market share with its Special Model because of competitors offering blenders with the same quality and features but at a lower price. A careful market study revealed that if Whitaker could reduce the price of its Special Model to $184, it would regain its former share of the market. Management, however, is convinced that any price reduction must be accompanied by a cost reduction of the same amount so that per-unit profitability is not affected. James Davis, company controller, has indicated that poor overhead costing assignments may be distorting management's view of each product's cost and, therefore, the ability to know how to set selling prices. James has identified the following overhead activities: machining, inspection, and rework. The three activities, their costs, and practical capacities are as follows: Activity Cost Practical Capacity Machining Inspection 3,555,000 $5,363,100 90,900 machine hours 45,000 inspection hours Rework 1,792,000 44,800 rework hours The consumption patterns of the two products are as follows: Special Super Units 100,000 26,500 Machine hours 50,800 40,100 Inspection hours 10,900 34,100 Rework hours 7,600 37,200 Whitaker assigns overhead costs to the two products using a plantwide rate based on machine hours.