Exercise 7.28 Wildhorse Electronics manufactures two large-screen, high-definition television (HDTV) models-the Monarch, which has been produced since 2010 and sells for $1,100, and the Regal, a model introduced in early 2012 that sells for $1,200. Wildhorse's CEO, Harry Hazelwood, suggested that the company concentrate its marketing resources on the Regal model and begin to phase out the Monarch model. Wildhorse currently uses a traditional costing system. The following cost information has been used as a basis for pricing decisions over the past year: Per-Unit Data Direct materials Direct labour hours Machine hours Units produced Monarch Regal $212 $566 1.2 3.4 12 6 20,000 3,800 The direct labour cost is $12 per hour, and the machine usage cost is $18 per hour. Manufacturing overhead costs were estimated at $5,220,580 and were allocated on the basis of machine hours. Martin Alecks, the new company controller, suggested that an activity-based costing analysis first be run to get a better picture of the true manufacturing cost. The following data were collected: Activity Centre Soldering Shipments Quality control Purchase orders Machining Machine setups Total traceable costs Cost Driver Number of solder joints Number of shipments Number of inspections Number of orders Machine hours Number of setups Traceable Costs $775,000 1,034,000 1,323,000 1,331,680 54,900 702,000 $5,220,580 Activity Soldering Shipments Quality control Purchase orders Machining Machine setups Number of Events Monarch Regal Total 1,235,000 315,000 1,550,000 15,400 6,600 22,000 56,600 16,900 73,500 86,300 103,940 190,240 172,000 11,000 183,000 16,000 10,000 26,000 Selling, general, and administrative expenses per unit sold are $264.00 for Monarch and $240.80 for Regal. X Your answer is incorrect. Try again. Calculate the manufacturing cost per unit for Monarch and Regal under a traditional costing system. (Round answers to 2 decimal places, e.g. 5.69.) Monarch Regal Cost per unit 464.78 119.19 LINK TO TEXT LINK TO TEXT LINK TO TEXT x Your answer is incorrect. Try again. Calculate the manufacturing cost per unit for Monarch and Regal under an ABC system. (Round answers to 2 decimal places, e.g. 5.69.) Monarch Regal x Cost per unit 398.79 1073.32 LINK TO TEXT LINK TO TEXT LINK TO TEXT X Your answer is incorrect. Try again. Calculate the operating profit/loss per unit for Monarch and Regal under a traditional costing system. (Round answers to 2 decimal places, e.g. 6.59. Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Monarch Regal Profit/(Loss) 371.22 233.21 LINK TO TEXT LINK TO TEXT LINK TO TEXT x Your answer is incorrect. Try again. Calculate the operating profit/loss per unit for Monarch and Regal under an ABC system. (Round answers to 2 decimal places, e.g. 6.59. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Monarch Regal Profit/(Loss) 437.21 -114.12
