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B&B Electronics Company manufactures two large-screen television models: the Deluxe, which has been produced for many years and sells for $1,100, and the Flat, a

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B&B Electronics Company manufactures two large-screen television models: the Deluxe, which has been produced for many years and sells for $1,100, and the Flat, a new model, which sells for $1,250. Based on the following income statement for 2020, the CFO at B & B has decided to concentrate the marketing resources on the Flat model and to begin to phase out the Deluxe model. B&B ELECTRONICS COMPANY Income Statement Year Ended December 31, 2020 Flat Deluxe Sales $ 5,000,000 $ 24,200,000 Cost of goods sold 3,680,000 15,840,000 Gross margin 1,320,000 8,360,000 Selling and administrative expenses 752,000 6,072,000 Net profit $ 568,000 $ 2.288,000 Units produced and sold 4,000 22,000 Net profit per unit sold $142 $104 Total $ 29,200,000 19.520,000 9,680,000 6,824,000 $ 2.856,000 The standard unit costs for the Flat and Deluxe models are as follows: Flat Deluxe $290 $650 70 30 Direct materials Direct labour: Flat (3.5 hrs. * $20/hr.) Deluxe (1.5 hrs. * $20/hr.) Machine usage: Flat (4 hrs. * $25/hr.) Deluxe (8 hrs. * $25/hr.) Manufacturing overhead Standard cost 100 200 200 100 $920 $720 Manufacturing overhead was applied on the basis of machine hours at a predetermined rate of $25 per hour. B & B's CFO is in favour of using an activity-based costing system and has gathered the following information about the company's manufacturing overhead costs for 2020: Manufacturing overhead was applied on the basis of machine hours at a predetermined rate of $25 per hour. B & B's CFO is in favour of using an activity-based costing system and has gathered the following information about the company's manufacturing overhead costs for 2020: Tota Activity Centres and Cost Drivers Soldering (number of solder joints) Shipments (number of shipments) Quality control (number of inspections) Purchase orders (number of orders) Machine power (machine hours) Machine set-ups (number of set-ups) Total traceable costs Activity Costs $ 924,000 820,000 1,080,000 785,000 96,000 1.095,000 $ 4.800,000 Units of the Cost Driver Flat Deluxe 270,000 1.270,000 5,200 15,300 19,000 53,000 107,000 50.000 16,000 176,000 4,000 6,000 1,540,000 20,500 72,000 157,000 192,000 10,000 Using activity-based costing, calculate the gross margin for Flat model and Deluxe model. (Round per machine hour to 5 decimal places, e.g. 15.21156, other intermediate calculations to 2 decimal places, e.g. 15.25 and final answers to 2 decimal places, e.g. 15.25%.) Flat Deluxe Gross margin % %

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