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1-62 Schultz Electronics manufactures two ultra high-definition television models: the Royale which sells for $1,480, and a new model, the Majestic, which sells for $1,270.
1-62 Schultz Electronics manufactures two ultra high-definition television models: the Royale which sells for $1,480, and a new model, the Majestic, which sells for $1,270. The production cost computed per unit under traditional costing for each model in 2020 was as follows. ideal Royale Majestic $410 8630 Traditional Costing Direct materials Direct labor ($20 per hour) Manufacturing overhead ($42 per DLH) Total per unit cost 100 252 210 720 $1.002 In 2020, Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $42 per direct labor hour was determined by dividing total estimated manufacturing overhead of $8,354,000 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $478 ($1,480 - $1,002) and Majestic $550 ($1,270 - $720). Because of this difference, management is considering phasing out the Royale model and increasing the production of the Majestic model. Before finalizing its decision, management asks Schultz's controller to prepare an analysis using activity-based costing (ABC). The controller accumulates the following information about overhead for the year ended December 31, 2020. Cost Drivers Estimated Use of Cost Drivers Activity-Based Overhead Rate Number of orders Activity Cost Pools Purchasing Machine setups Machining Quality control Estimated Overhead $1,400,800 932800 5.240.400 780,000 Number of setups Machine hours Number of inspections 41,200 17,600 119.100 30,000 $24/order $53/setup $44/hour $26/inspection The cost drivers used for each product were: Cost Drivers Purchase orders Machine setups Machine hours Inspections Royale 18.000 5.000 75.000 12.000 Majestic 23,200 12,600 44,100 18,000 Total 41.200 17,600 119,100 30,000 Assign the total 2020 manufacturing overhead costs to the two products using activity-based costing (ABC) and determine the overhead cost per unit. (Round cost per unit to 2 decimal places, e.g. 12.25.) /ZU) because of this onerence, management is considering phasing out the Royale model and increasing the production of the Majestic model. Before finalizing its decision, management asks Schultz's controller to prepare an analysis using activity-based costing (ABC). The controller accumulates the following information about overhead for the year ended December 31, 2020 Activity Cost Pools Purchasing Machine setups Machining Quality control Cost Drivers Number of orders Number of setups Machine hours Estimated Overhead $1.400.800 932.800 5.240.400 790000 Estimated Use of Cost Drivers 41.200 17.600 119.100 20.000 Activity-Based Overhead Rate 334/order $53/wetup $44 hour 326/inspection Number of inspections The cost drivers used for each product were: Royale Cost Drivers Purchase orders Machine setups Machine hours Inspections 18.000 5.000 75,000 12.000 Majestic 23.200 12.600 44.100 18.000 Total 41.200 17,600 119,100 30.000 Assign the total 2020 manufacturing overhead costs to the two products using activity-based costing (ABC) and determine the overhead cost per unit. (Round cost per unit to 2 decimal places, e.g. 12.25.) Royale Majestic Total assigned costs Cost per unit Calculate cost per unit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.) Royale Majestic Costerunt Calculate gross profit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.) Royale Majestic Gross profit Click if you would like to Show Work for this question: Open Show Work Question Attempts: Unlimited
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