20,000 P4-2A Assign overhead to Schultz Electronics manufactures two ultra high-definition televis a new model, the Majestic, which sells for $1,300. The production usin Royale which sells for $1,600 and unit under traditional costing for each model in 2017 as follows. and evaluate decision computed pe Traditional Costing Direct materials Direct labor ($20 per hours) Manufacturing overhead ($38 per DLH) RoyaleMajestic $700 120 228 $1,048 Total per unit cost 100 $71 uitz manufactured 25,000 units of the Royale and 10,000 units of the Ma Majestic. The overhead rate of overhead of $7,600,000 by the total direct labor hou ect labor hour was determined by dividing total expected manufacturing ove rs (200,000) for the two model:s. ($1 the production of the Majestic model. ger traditional costing, the gross profit on the models was Royale 552 ($1,600 1,300-5710). Because of this difference, management is considering phasing out -$1,048) and Majestic $590 Before finalizing its decision, management asks Sc costing (ABC). The controller accumulates the following information about oveme hultz's controller to prepare an analysis using activity-based Activity Cost Pools Estimated Use Activity-Based Estimated Overhead Rates of Cost Drivers Cost Drivers Purchasing Machine setups Machining Quality control Number of orders Number of setups Machine hours Number of inspections $1,200,000 900,000 4,800,000 700,000 40,000 18,000 120,000 28,000 $25/inspection $30/order $50/setup $40/hour The cost drivers used for each product were: Majestic 13,000 17,000 Total 40,000 18,000 120,000 28,000 Royale 17,00023,000 Cost Drivers Purchase orders Machine setups Machine hours Inspections 75,000 11,000 Instructions (a) Assign the total 2017 manufacturing overhead costs to the two products using activity-based costing (ABc) and (b) What was the cost per unit and gross profit of each model using ABC costing? (c) Are management's future plans for the two models sound? Explain. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a determine the overhead cost per unit. "?" (a) The allocation of total manufacturing overhead using activity-based costing is as follows: Royale Majestic Total Overhead Rate Purchase order@$30 Machine setups @$50 Machine hours @$40 Inspections @$25 Drivers Used Value Value Value Value Cost Assigned Cost Assigned Overhead Drivers Used Value Value Value Value Total assigned costs (a) Units produced (b) Value Value Cost per unit (a) + (b) (b) The cost per unit and gross profit of each model under ABC costing were: Direct materials Direct labor Manufacturing overhead Royale Value Value Value Majestic Value Value Value Total cost per unit Sales price per unit Cost per unit Value Value Value Value Gross profit per unit I(c) Are management's future plans for the two models sound? Explain. After you have completed P4-2A, consider the additional question. 1. Assume that the purchase orders used by Ro Al dels changed to 12,000 and 16,000 to two decimal points. yale and Majestic changed to 19,000 and 21,000 respectively so assume that the number of inspections used by Royale and Majestic mo respectively. Redo instsructions (a) to (c) and round cost and gro ss profit per unit