Williams Fans manufactures three model fans for industrial use. The standard selling price and cost of each fan follow: Model 501 Selling price $6,361 Unit cost: Materials 1,647 Direct labor 843 Overhead Unit profit (loss) 874 $2,997 Model 541 Model 599 $11,915 5,400 2,682 3,510 $323 $15,085 7,033 4,917 7,004 ($3,869) Essentially, all overhead costs are fixed. Some of the fixed overhead costs are direct costs to particular models, and others are common fixed costs. Model 501 Model 541 Direct fixed $5,010,800 $1,991,400 Model 599 $999,100 Total Common fixed Total $8,001,300 5,001,828 $13,003,128 Williams allocates overhead costs to products using a single overhead rate developed as follows. Estimated total overhead is divided by estimated direct labor cost. This results in an overhead rate per labor dollar. This rate is used to assign standard overhead to products. Below are estimates of sales and direct labor. These values imply an overhead rate of $1.3155 per labor dollar ($13,003,128 $9,884,682). Estimated unit sales Estimated labor Model 501 1,101 $928,143 Model 541 2,311 $6,198,102 Model 599 561 $2,758,437 Total 3,973 $9,884,682 Because Model 599 is showing a loss, the controller of Williams has asked you to analyze whether it should be dropped. You should assume that direct fixed costs will be avoided if a model is dropped but common fixed costs will not be avoided if the model is dropped.