c. Comment on the results. P5.37A (LO.2) Jacobson Electronics manufactures two HD television models: the Royale, which sells for $1,400, and a new model, the Majestic, which sells for $1,100. The production costs calculated per unit under traditional costing for each model in 2020 were as follows: Assign overhead to products using ABC and evaluate the decision. Excel Traditional Costing Direct materials Direct labour ($20 per hour) Total per-unit cost Royale Majestic $600 $320 100 80 140 $875 $540 Manufacturing overhead ($35 per direct labour hour) 175 In 2020, Jacobson manufactured 20,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $35 per direct labour hour was determined by dividing total estimated manufacturing overhead of $4.9 million by the total direct labour hours (140,000) for the two models. Under traditional costing, the gross profit on the models was $525 for the Royale (or $1,400 - $875), and $560 for the Majestic (or $1,100 - $540). 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 Jacobson'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: Activity Cost Cost Estimated Estimated Use of Activity-Based Pools Drivers Overhead Cost Drivers Overhead Rate Purchasing Number of $ 750,000 25,000 $30 per order orders Machine Number of 600,000 20,000 30 per set-up set-ups set-ups Machining Machine 3,100,000 100,000 31 per hour hours Quality control Number of inspections 450,000 5,000 90 per inspection The cost drivers used for each product were as follows: Cost Drivers Royale Majestic Total Purchase orders 11,250 13,750 25,000 Machine set-ups 10,000 10,000 20,000 Machine hours 40,000 60,000 100,000 Inspections 2,250 2,750 5,000 Instructions a. Assign the total 2020 manufacturing overhead costs to the two products using activity-based costing (ABC). Royale $2,080,000 b. What was the cost per unit and gross profit of each model using ABC costing? Cost/unit-Royale $804 C. Writing Are management's future plans for the two models sound? Explain