Assign overhead to products using ABC and evaluate decision. A Schultz Electronics manufactures two ultra high-definition television models: the Rovale which sells for $1,600, and a new model, the Majestic, which sells for $1,300. The pro- duction cost computed per unit under traditional costing for each model in 2017 was as follows (LO 2), AP Traditional Costing Royale Majestic Direct labor ($20 per hour) Manufacturing overhead ($38 per DLH) Total per unit cost 700 120 228 $1,048 $420 190 $710 XLS In 2017, Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $38 per direct labor hour was determined by dividing total expected manufacturing overhead of $7,600,000 by the total direct labor hours (200,000) for the two models Under traditional 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 con- sidering 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 in- formation about overhead for the year ended December 31, 2017. Activity- Based Overhead Rate $30/order $50/setup $40/hour Expected Activity Estimated Use of Overhead Cost Drivers Cost Pools Cost Drivers Machine setups Machining Quality control Number of inspections 700,000 28,000 $25/inspection Number of orders Number of setups Machine hours $1,200,000 900,000 18,000 4,800,000120,000