Harvey Company produces two models of blenders: the Super Model (priced at $401) and the Special Model (priced at $200). Recently, Harvey 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 Harvey could reduce the price of its Special Model to $180, 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. Earl Wise, company controller, has indicated that poor overhead costing assignments may be distorting managements view of each products cost and, therefore, the ability to know how to set selling prices. Earl 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	$5,080,800	87,600 machine hours
Inspection	3,578,700	45,300 inspection hours
Rework	1,836,800	44,800 rework hours

The consumption patterns of the two products are as follows:

	Special	Super
Units	100,000	30,400
Machine hours	48,800	38,800
Inspection hours	10,000	35,300
Rework hours	7,200	37,600

Harvey assigns overhead costs to the two products using a plantwide rate based on machine hours.