CALCULATOR FULL scREEN PRINTER VERSION .BACK NEXT Question 8 Schultz Electronics manufactures two large-screen television models: the Royale which sells for $1,552, and a new model, the Mayestic, which sells for $1,300. The production cost computed per unit under traditional costing for each model in 2014 was as follows. Royale Majestic tional Costing Direct materials $640 $390 Direct labor ($20 per hour) 120 100 Manufacturing overhead ($42 per DUH) 252 210 Total per unit cost $1,012 $700 In 2014, Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $42 per direct labor hour was determined by dividing total expected manufacturing overhead of $8,348,620 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $540 or (s1,552-$1,012), and Majestic $600 or ($1,300 $700. 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'scontroller to prepare an analysis using activity-based costing (ABC). The controller accumulates the folowing information about overhead for the year ended December 31, 2014 Cost Drivers $1,398,250 39,950 $35order umber of orders 17,820 53/'setup Number of setups 5,149,250 119,750 Machine hours 856,660 29,540 Quality control Number of inspections The cost drivers used for each product Version 4.21.04 Division of John asons Inc. All Rights Reserved