Crane 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 2020 was as follows. Traditional Costing Direct materials Direct labor ($20 per hour) Manufacturing overhead ($38 per DLH) Total per unit cost Royale $600 120 228 $948 Majestic $390 100 190 $680 In 2020, Crane manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $38 per direct labor hour was determined by dividing total estimated manufacturing overhead of $7,508,000 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $532 ($1,480 - $948) and Majestic $590 ($1,270 - $680). 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 Crane'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 Pools Purchasing Machine setups Machining Quality control Cost Drivers Number of orders Number of setups Machine hours Number of inspections Estimated Overhead $1,178,000 816,000 4,838,000 676,000 Estimated Use of Cost Drivers 38.000 16,000 118,000 26,000 Activity-Based Overhead Rate $31/order $51/setup $41/hour $26/inspection The cost drivers used for each product were: Total Cost Drivers Purchase orders Machine setups Machine hours Royale 16,000 4,000 74,000 Majestic 22,000 12,000 44,000 38,000 16,000 118,000 Assign the total 2020 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, e.g. 12.25.) Royale Majestic Total assigned costs $ $ Cost per unit $ $ e Textbook and Media 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 $ $ e Textbook and Media Calculate gross profit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.) Royale Majestic Gross profit $ $ e Textbook and Media Crane 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 2020 was as follows. Traditional Costing Direct materials Direct labor ($20 per hour) Manufacturing overhead ($38 per DLH) Total per unit cost Royale $600 120 228 $948 Majestic $390 100 190 $680 In 2020, Crane manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $38 per direct labor hour was determined by dividing total estimated manufacturing overhead of $7,508,000 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $532 ($1,480 - $948) and Majestic $590 ($1,270 - $680). 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 Crane'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 Pools Purchasing Machine setups Machining Quality control Cost Drivers Number of orders Number of setups Machine hours Number of inspections Estimated Overhead $1,178,000 816,000 4,838,000 676,000 Estimated Use of Cost Drivers 38.000 16,000 118,000 26,000 Activity-Based Overhead Rate $31/order $51/setup $41/hour $26/inspection The cost drivers used for each product were: Total Cost Drivers Purchase orders Machine setups Machine hours Royale 16,000 4,000 74,000 Majestic 22,000 12,000 44,000 38,000 16,000 118,000 Assign the total 2020 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, e.g. 12.25.) Royale Majestic Total assigned costs $ $ Cost per unit $ $ e Textbook and Media 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 $ $ e Textbook and Media Calculate gross profit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.) Royale Majestic Gross profit $ $ e Textbook and Media
