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 2016 were as follows: Traditional Costing Royale Majestic Direct materials $600 $320 Direct labour ($20 per hour) 80 100 Manufacturing overhead ($35 per direct labour hour) 175 140 $540 $875 Total per unit cost In 2016, Jacobson manufactured 25,480 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 expected 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, 2016: Estimated Expected Use Activity-Based Cost Drivers Activity Cost Pools Overhead of Cost Drivers Overhead Rate $986,680 Purchasing Number of orders 29,020 $34 per order 786,560 Machine set-ups Number of set-ups 24,580 32 per set-up Machining Machine hours 3,134,100 101,100 31 per hour Number of inspections 588,000 Quality control 5,880 100 per inspection The cost drivers used for each product were as follows: Cost Drivers Royale Majestic Total Purchase orders 11,250 14,070 25,320 Machine set-ups 10,800 10,000 20,800 Machine hours 31,710 64,120 95,830 1,600 2,940 4,540 Inspections