The case of Indoor Pursuits Indoor Pursuits (IP), a division of Network Diversions Limited (NDL), produces two computers: the Ruby, which IP has produced since 2015 and sells for $990; and the Diamond, a newer model introduced in late 2017 that sells for $1 254. The income statement of the Indoor Pursuits (IP) for the year ended 30 November 2018 is as follows:

Indoor Pursuits Income statement for the nancial year ended 30 November 2018 Ruby Diamond Total Revenues $21,780,000 $5,016,000 $26,796,000 Cost of goods sold $13,794,000 $3,511,200 $17,305,200 Gross margin $7,986,000 $1,504,800 $9,490,800 Selling and administrative expense $6,413,000 $1,075,800 $7,488,800 Operating income $1,573,000 $429,000 $2,002,000 Units produced and sold 22,000 4,000 $26,000 Operating income per unit sold $71.50 $107.25 Details for cost of goods sold for Ruby and Diamond are: Ruby Diamond Costs Total Per unit Total Per unit Direct materials $5,033,600 $228.80 $2,569,600 $642.40 Direct production labour\" $435,600 $19.80 $184,800 $46.20 Machineb $3,484,800 $153.40 $316,800 $79.20 Total direct $3,954,000 $407.00 $3,071,200 $767.80 Production overhead\" $4,840,000 $220.00 $440,000 $110.00 Total cost of goods sold $13,794,000 $627.00 $3,511,200 $877.80 " Ruby requires 1.5 hours per unit, and Diamond requires 3.5 hours per unit. The direct production labour rate is $13.20 per hour. Activity-cost-driver quantities Total Activity-cost driver (driver quantity) Ruby Diamond Total Activity Costs Soldering (number of solder points) 1,185,000 385,000 1,570,000 $1,036,200 Shipments (number of shipments) 16,200 3,800 20,000 $946,000 Quality control (number of inspections) 56,200 21,300 77,500 $1,364,000 Purchase orders (number of orders) 80,100 109,980 190,080 $1,045,400 Machine power (machine-hours) 176,000 16,000 192,000 $63,400 Machine set-ups (number of set-ups) 16,000 14,000 30,000 $825,000 Total production overhead $5,280,000