The following cost information is available for the Stuart and Hahn Corporation: Direct material $14 per unit for deluxe pillows $10 per unit for regular pillows Direct labor $20 per hour (including benefits)

During the year, 30,000 purchase orders were issued; 20,000 shipments were received; machine setups numbered 2,500; and 25,000 inspections were conducted.

A customer has contacted the company requesting comparative bids for an order of 100 deluxe pillows and 100 regular pillows. The company adds a 20 percent markup on deluxe pillows and 15 percent on regular pillows for its profits. The company’s records indicate that the following activities would be required to complete an order of 100 deluxe and regular pillows:

Required

Compute the bids for deluxe and regular pillows on a total orderbasis.

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Activity Allocation Base Overhead Cost Purchasing Number of purchase orders $150,000 Receiving Number of shipments received 50,000 Machine setups Number of setups 250,000 Quality control Number of inspections 125,000