Stuart Chairs, Inc. makes two types of chairs. Model Diamond is a high-end product designed for professional offices. Model Gold is an economical product designed for family use. Jane Silva, the president, is worried about cut-throat price competition in the chairs market. Her company suffered a loss last quarter, an unprecedented event in its history. The companys accountant prepared the following cost data for Ms. Silva:

Direct Cost per Unit	Model Diamond (D)						Model Gold (G)
Direct materials				$	20.80	per unit				$	9.40	per unit
Direct labor	$	17.10	/hour		2.00	hours production time	$	17.10	/hour		1.00	hour production time

Category	Estimated Cost					Cost Driver	Use of Cost Driver
Unit level		$	294,000			Number of units	D: 12,000 units; G: 37,000 units
Batch level			980,000			Number of setups	D: 114 setups; G: 166 setups
Product level			651,000			Number of TV commercials	D: 8; G: 13
Facility level			264,000			Number of machine hours	D: 2,400 hours; G: 2,000 hours
Total		$	2,189,000

The market price for office chairs comparable to Model Diamond is $125 and to Model Gold is $75.