11) Wilk Electronics manufactures two large-screen HD/3D television models, the Royale, which sells for $1,600 and a new model, the Majestic, which sells for $1,300. The production cost computed per unit under traditional costing for each model in 2018 was as follows: Traditional Costing Royale Majestic Direct materials $ 700 $ 420 Direct Labor ($20 per hour) 120 100 Manufacturing overhead ($38 per DLH) 190 Total per unit cost $1,048 $ 710 In 2018, Wilk manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $38 per DLH was determined by dividing total expected manufacturing overhead of $7,600,000 by the total direct labor hours (200,000 hours) for the two models. Under direct costing, the gross profit on the models was Royale $552 ($1,600 - $1,048) and Majestic $590 ($1,300 - $710). Because of this difference, management is considering phasing out the Royale model and increasing the production of the Majestic model. Before finalizing its decision, Wilk's controller prepared an analysis using activity-based costing (ABC), for the year ended December 31, 2018: Expected Estimated Use of Activity-Based Activities Cost Drivers Overhead Cost Drivers Overhead Rate Purchasing Number of orders $1,200,000 40,000 Machine setups Number of setups 900,000 18.000 Machining Machine hours 4,800,000 120,000 Quality control Number of inspections 700,000 28,000 The cost drivers used for each product were: Cost Drivers Royale Majestic Total Purchase orders 17,000 23,000 40,000 Machine setups 5,000 13,000 18,000 Machine hours 75,000 45,000 120,000 Inspections 11,000 17,000 28,000 Instructions i) calculate the four (4) predetermined activity-based overhead rates, labelled a, b, c and d above ii) assign the total 2018 manufacturing overhead costs to the two products using activity-based costing (ABC) and determine the overhead cost per unit ii) what was the cost per unit and gross profit of each model using ABC costing? iv) are management's future plans for the two models sound? Explain