Payton

Bags (PB) is a designer of high-quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and the purse. The company uses these designs for a year and then moves on to the next trend. The bags are all made on the same fabrication equipment that is expected to operate at capacity. The equipment must be switched over to a new design and set up to prepare for the production of each new batch of products. When completed, each batch of products is immediately shipped to a wholesaler. Shipping costs vary with the number of shipments. Budgeted information for the year is as follows:

Payton Bags
Budget for Costs and Activities
For the Year Ended February 29, 2020
Direct materialspurses	$382,800
Direct materialsbackpacks	421,200
Direct manufacturing laborpurses	89,100
Direct manufacturing laborbackpacks	105,300
Setup	49,735
Shipping	72,065
Design	167,000
Plant utilities and administration	208,000
Total	$1,495,200

Other budget information follows:

	Backpacks	Purses	Total
Number of bags	5,850	3,300	9,150
Hours of production	1,560	2,600	4,160
Number of batches	131	72	203
Number of designs	3	2	5

he cost per backpack is

and the cost per purse is

.