The Cholesterol Company is reexamining its pricing based upon a recent report from a consultant. Currently, the company uses a volume based pricing system with direct labor hours as the cost driver. They are uncomfortable with a volume-based system because of its behavioral consequences. Accordingly, they are considering switching to either an activity based costing system or a volume based system using machine hours as the cost driver. The company produces VERY expensive jeweled eggs. An analysis of cost pools produced the information below. Level of Cost Expected Cost Annual Costs Driver Driver mh hrs 20,000 hours Machine related costs $100,000 Material handling $100,000 cups of mix 50,000 cups Engineering and $100,000 100,000 parts prts technology service $16,000 direct labor 8,000 hours Quality control hours of setups 100 Setups Machine setup $50,000 Other overhead cost $160,000 direct labor $80,000 direct dollars labor dollars $526,000 Total The EGG is produced in batches of 100.The Batch ticket for the EGG shows the following