Exercise 17.15 Using ABC to Determine a Bid Price (LO17-6, LO17-7) Spear Custom Furniture uses an activity-based cost accounting system to apply overhead to production. The company maintains fou overhead cost pools. The four cost pools, and their budgeted amounts for the upcoming period, are as follows. Maintenance Materials handling Set-ups Quality control $40,000 20,000 10,000 45,000 Four cost drivers are used by Spear to allocate its overhead cost pools to production. The four cost drivers, and their budgeted total levels of activity for the upcoming period, are shown as follows. Machine-hours (to allocate maintenance costs) Material moves (to allocate materials handling costs) Set-ups (to allocate set-up costs) Number of inspections (to allocate quality control costs) 600 hours 400 moves 100 set-ups 300 inspections The company has been asked by Cosmopolitan University to submit a bid for tables to be used in a new computer lab. The plant manager feels that obtaining this job would result in new business in future years. Estimates for the Cosmopolitan University project are as follows. $14,000 15,000 Direct materials Direct labor (500 hours) Number of machine-hours Number of material moves Number of set-ups Number of inspections a. Estimate the total cost of manufacturing the tables for Cosmopolitan University. b. Determine the company's bid price if bids are based upon the total estimated manufacturing cost of a particular project, plus 75 percent