AutoSave HI Appendix H Homework (1) - Saved to this PC Search Patel, Akshay Hasmukh PH 0 x File Home Insert Design Layout References Mailings Review View Help Share Comments 1.1.TXT...1...1...2...1...3...T...4...T...5...1...6: XL:7 APPENDIX H - MANUAL, OFF-LINE HOMEWORK ASSIGNMENT EXERCISE H-2 (worth 2 points): Mordica Company identifies three activities in its manufacturing process: machine setups, machining, and inspections. Estimated annual overhead cost for each activity is $150,000, $325,000, and $87,500, respectively. The cost driver for each activity and the expected annual usage are number of setups 2,500, machine hours 25,000, and number of inspections 1,750. Instructions Please use an Excel spreadsheet to compute the overhead rate for each activity and upload it into Canvas. Clearly mark each activity's answer. EXERCISE H-5 (worth 6 points): Schultz Electronics manufactures two large-screen 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 2020 was as follows. Assign overhead to products using ABC and evaluate decision. Traditional Costing Royale Majestic Direct materials $ 700 $420 Direct labor ($20 per hour) 120 100 Manufacturing overhead ($38 per DLH) 228 190 Total per unit cost $1,048 $710 In 2020, 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 or ($1,600 - $1,048), and Majestic $590 or ($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, 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. Activities Cost Drivers Estimated Expected Use of Activity-Based Overhead Cost Drivers Overhead Rate Purchasing Number of $1,200,000 40,000 $30/order orders Machine Number of 900,000 18,000 $50/setup setups setups Activities Cost Drivers Estimated Expected Use of Activity-Based Overhead Cost Drivers Overhead Rate Machining Machine hours 4,800,000 120,000 $40/hour Quality Number of 700,000 28,000 $25/inspection control inspections 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 Please use an Excel spreadsheet for your answers, clearly marking the answers to each requirement (a) - (c) and upload into Canvas a. Assign the total 2020 manufacturing overhead costs to the two products using activity-based costing (ABC) and determine the overhead cost per unit. b. What was the cost per unit and gross profit of each model using ABC? c. Are management's future plans for the two models sound? Explain. 11.11.18.1.11.17...1..16111111151111111111111131111111211111111..1.. Page 1 of 2 432 words LX Focus 80% i Type here to search B 9:50 PM 2/16/2021