Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Bonita Electronics manufactures two ultra-high-definition television models: the Royale, which sells for $1.480, and a new model, the Majestic, which sells for $1.270. The production

image text in transcribedimage text in transcribedimage text in transcribed

Bonita Electronics manufactures two ultra-high-definition television models: the Royale, which sells for $1.480, and a new model, the Majestic, which sells for $1.270. The production cost computed per unit under traditional costing for each model in 2022 was as follows. Royale Majestic $ 630 $ 410 Traditional Costing Direct materials Direct labor ($20 per hour) Manufacturing overhead ($ 41.770 per DLH) Total per unit cost 120 100 251 209 $ 1,001 $ 719 In 2022, Bonita manufactured 25,000 units of the Royale and 10,000 units of the Majestic The overhead rate of $41.770 per direct labor hour was determined by dividing total estimated manufacturing overhead of $8.354,000 by the total direct labor hours (200,000) for the two models. Under traditional costing the gross profit on the models was Royale $ 479 (S 1.480 - $ 1.001) and Majestic $ 551 ($ 1.270 - $ 719). 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 Bonita'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, 2022. Activity Cost Pools Estimated Overhead Estimated Use of Cost Drivers Cost Drivers Number of orders Activity-Based Overhead Rate $ 34/order Purchasing $ 1.400,800 41.200 Machine setups Number of setups 932.800 17,600 $53/setup Machine hours 5,240,400 119,100 $ 44/hour Machining Quality control Number of inspections 780.000 30.000 $ 26/inspection The cost drivers used for each product were: Royale Majestic Total Cost Drivers Purchase orders Machine setups 18.000 23.200 41,200 5.000 12.600 17,600 Machine hours 75,000 44.100 119.100 Inspections 12.000 18.000 30,000 Assign the total 2022 manufacturing overhead costs to the two products using activity-based costing (ABC) and determine the overhead cost per unit. (Round cost per unit to 2 decimal places, eg. 12.25.) Royale Majestic Total assigned costs $ S Cost per unit $ $ Calculate cost per unit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.) Royale Majestic Cost per unit Calculate gross profit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.) Royale Majestic Gross profit

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Connect For Computer Accounting With Quickbooks Online

Authors: Donna Kay

2nd Edition

1264152272, 9781264152278

More Books

Students also viewed these Accounting questions

Question

How might HR technology affect the various HR functions?

Answered: 1 week ago