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MaxiDrive manufactures a wide variety of parts for recreational boating, including a gear and driveshaft part for high-powered outboard boat engines. Original equipment manufacturers such

MaxiDrive manufactures a wide variety of parts for recreational 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 $615, and sales volume averages 25,500 units per year. Recently, MaxiDrive's major competitor reduced the price of its equivalent unit to $552. The market is very competitive, and MaxiDrive realizes it must meet the new price or lose significant market share. Management has begun paying closer attention to costs and has reconfirmed the current existing standard costs. The controller then assembled the following cost and usage data for the most recent year for MaxiDrive's production of 25,500 units:

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Direct materials 5 6,558,886 $ 2,858,886 Direct labor 2,515,886 2,658,886 Indirect labor 2,528,886 2,425,886 Inspection (hours and cost) 946 318,886 1,856 355,886 Materials handling (number of purchases and cost) 3,656 525,886 3,586 518,886 Machine setups (nu-her and cost) 1,456 275,886 1,556 258,886 Returns and rework (number of times and cost) 316 85,886 516 135,886 $13,288,886 $13, 875,966

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