Sherman Company manufactures and sells small pumps made to customer specifications. It has two service departments and two production departments. Data on current year operations follow:

Management allocates maintenance department costs using machine hours, and power department costs using kilowatt-hours. Separate cost driver rates are determined on the basis of machine hours for the casting department and on the basis of direct labor hours for the assembly department. It takes 1 machine hour to manufacture a pump in the casting department and 0.5 labor hour to assemble a pump in the assembly department. Direct labor and material costs amount to $32 per pump.A prospective customer has requested a bid on a two-year contract to purchase 1,000 pumps every month. Sherman Company has a policy of adding a 25% markup to the full manufacturing cost to determine the bid. Required(a) What is the bid price when the direct method is used?(b) What is the bid price when the sequential method that begins by allocating maintenance department costs is used?(c) What is the bid price when the reciprocal method is used?

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SERVICE DEPARTMENTS MAINTENANCE PRODUCTION DEPARTMENTS ASSEMBLY CASTING ITEM POWER $450,000 Costs Machine hours Kilowatt-hours Direct labor hours $750,000 S150,000 $110,000 40,000 80,000 80,000 40,000 200,000 100,000 160,000 60,000