AutoSave On B 2 ExcelTemplateAssignment, Ch04 (5) - Excel Search File Home Insert Page Layout Formulas Data Review View HelpDYMO Label QuickBooks P4-2A Assign overhead to products using ABC and evaluate decision A B C D E F G H I J K 1 P4-2A Assign overhead to products using ABC and evaluate decision 2 Schultz Electronics manufactures two ultra high-definition television models: the Royale which sells for $1,600 and 3 a new model, the Majestic, which sells for $1,300. The production cost computed per unit under traditional costing 4 for each model in 2017 as follows. Majestic 6 Traditional Costing 7 Direct materials 8 Direct labor ($20 per hours) 9 Manufacturing overhead ($38 per DLH) 10 Total per unit cost $420 Royale $700 120 228 $1.048 100 190 $710 12 in 2017. Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rato of 13 $38 per direct labor hour was determined by dividing total expected manufacturing overhead of $7,600,000 by the 14 total direct labor hours (200,000) for the two models. 15 Under traditional costing, the gross profit on the models was Royal 652 ($1,600 - $1,048) and Majestic $590 16 ($1,300 - $710). Because of this difference, management is considering phasing out the Royale model and increasing 17 the production of the Majestic model. 18 Before Fnalizing its decision, management asks Schultz's controller to preparo an analysis using activity-based 19 costing (ABC). The controller accumulates the following Information about overhead for the year ended December 31, 2017 22 Activity 23 Cost Pools Cost Drivers 24 Purchasing Number of orders 25 Machine setups Number of setups 26 Machining Machino hours 27 Quality control Number of Inspections 28 29 The cost drivers used for each product were: Estimated Overhead $1,200,000 900,000 4,800,000 700,000 Estimated Use of Cost Drivers 40,000 18,000 120,000 28,000 Activity-Based Rates $30/order $50/setup $40/hour $26/inspection Cost Drivers Royale Purchase orders 17.000 Machine setups 6,000 Machine hours 75,000 Inspections 14- 154- 4E4-9 P4-14 P4-2A CD Total 40,000 Malestic 23,000 13.000 45,000 17.000 18.000 120.000 11,000 28,000 Type here to search 0 AutoSave Of ExcelTemplateAssignment Cho (5) - Excel Search File Home Insert Page Layout Formulas Data Review View HelpDYMO Label QuickBooks 1 X P4-2A Assign overhead to products using ABC and evaluate decision - B C D E F G H I K L #7 Instructions 38 (a) Assign the total 2017 manufacturing overhead costs to the two products using activity-based costing (ABC) and 39 determine the overhead cost per unit. 10 (6) What was the cost per unit and gross profit of each model using ABC costing? 41(c) Are management's future plans for the two models sound? Explain. 42 43 NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?". 48 45 46(a) The allocation of total manufacturing overhead using activity-based costing is as follows: 47 Royale Majestic 49 Overhead Rato Drivers Used Cost Assigned Drivers Used Cost Assigned 50 Purchase order@$30 Value Value 51 Machine setups @$50 Value Value 52 Machine hours $40 Value 53 Inspections @$25 Value Value 54 Total assigned costs (a) Total Overhead Value Value Value Units produced (b) Cost per unit (a) + () 62 (b) The cost por unit and gross profit of each model under ABC costing were: Royale 65 Direct materials Value 66 Direct labor Value 67 Manufacturing overhead Value 68 Total cost per unit 2 69 701 sales price per unit Value | E4- E44E4-9 P4-1A Majestic Value Value Value P4-2A Value CD4 AutoSave o Excel TemplateAssignment choi(5) Excel O Search File Home Insert Page Layout Formulas Data Review View HelpDYMO Label QuickBooks A1 PA-2A Assign overhead to products using ABC and evaluate decision 24 A B C D E Total assigned costs (a) Units produced (b) Value Value Cost per unlt ()+(b) 62 (b) The cost per unit and gross profit of each model under ABC costing were 65 Direct materials 66 Direct labor 67 Manufacturing overhead 68 Total cost per unit Royalo Value Value Value Majestic Value Value Value Value Value 70 Sales price per unit 71 Cost per unit 72 Gross profit per unit 75 (C) Are management's future plans for the two models sound? Explain 79 80 81 82 83 After you have completed P4-2A, consider the additional question 84 1. Assume that the purchase orders used by Royale and Majestic changed to 10,000 and 21,000 respectively. Also assume that the number of inspections used by Royalo and Majestic modois changed to 12,000 and 16,000 86 respectively. Redo Instructions (@) to (c) and round cost and gross profit per unit to two decimal points. 54- 1E44E4-9 P4-1AP4-2A CO