Maxi Company manufactures a wide variety of parts for recreation boating, including a gear and driveshaft part for high-powered outboard boat engines. Original equipment manufacturers such as Mercury and Honda purchase the components for use in large powerful outboards. The part sells for P 610and sales volume averages 25,000 units per year. Recently, Maxi's major competitor reduced the price of its equivalent unit P 550. The market is very competitive and Maxi realizes it must meet the new price or lose significant market share. The controller has assembled these costs and usage data for the most recent year for Maxi's production of 25,000 units

Budgeted Budgeted Actual Actual Cost Quantity Cost Quantity Materials P 6,500,000 P7,000,000 Direct labor 2,500,000 2,625,000 Indirect labor 2,500,000 2,400,000 Inspection (hours and cost) 920 300,000 1,000 350,000 Materials handling (no. of purchases & cost) 3,500 500,000 3,450 485,000 Machine set-ups (number and cost) 1,400 750,000 1,500 725,000 Returns and reword (no. of times & cost) 300 80,000 500 130,000 P13,130,000 P13,715,000