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. An icon shows a circle containing a rightward arrow, with a rectangular text box on its right reading, Excel. Traditional Costing 00 Royale 00 Majestic Direct materials $600 $320 Direct labour ($20 per hour) $100 $180 Manufacturing overhead ($35 per direct labour hour) $175 $140 Total per-unit cost $875 $540 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 Pools 00 Cost Drivers 00 Estimated Overhead 00 Estimated Use of Cost Drivers 00 Activity-Based Overhead Rate Purchasing Number of orders $2750,000 225,000 $30 per order Machine set-ups Number of set-ups 2$600,000 220,000 $30 per set-up Machining Machine hours 3,100,000 100,000 $31 per hour Quality control Number of inspections 2.450,000 215,000 $90 per inspection The cost drivers used for each product were as follows: Cost Drivers 00 Royale 00 Majestic 00 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/unitRoyale $804 c. Writing Are management's future plans for the two models sound? Explain.