Mattress Comfort Corporation manufactures two types of mattresses, Dreamer and Sleeper. Dreamer has a complex

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Mattress Comfort Corporation manufactures two types of
mattresses, Dreamer and
Sleeper.
Dreamer has a complex design that uses gel-filled compartments to
provide support. Sleeper is simpler to manufacture and uses
conventional padding. Last year, Mattress Comfort had the
following revenues and costs:
Dreamer
Sleeper
Total
Revenue
$700,000
$500,000 $1,200,000
Direct
Materials
300,000
150,000
450,000
Direct
Labor
150,000

75,000
225,000
Indirect Costs:
Administration

60,000
Production
Setup

80,000
Quality
Control

100,000
Sales and
Marketing
180,000
Operating
Profit

$105,000
Mattress Comfort currently uses labor costs to allocate all
overhead, but management is considering implementing an
activity-based costing system. After interviewing the sales
and production staff, management decides to allocate administrative
costs on the basis of direct labor costs, but to use the following
bases to allocate the remaining overhead:
Activity
Level
Activity
Cost
Driver
Dreamer
Sleeper
Production
Setup
Number of Production
Runs
30
50
Quality
Control
Number of
Inspections

25
75
Sales and
Marketing
Number of
Advertisements
30
70
Assume that each Dreamer mattress is sold for $350 and that each
Sleeper mattress is sold for $200.
Required: