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Lastly, the gross profit of both Royale and Majestic as well. Bonita Electronics manufactures two ultra high-definition television models: the Royale which sells for $1,480,
Lastly, the gross profit of both Royale and Majestic as well.
Bonita 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 Royale Direct materials $630 Majestic $410 100 120 Direct labor ($20 per hour) Manufacturing overhead ($42 per DLH) Total per unit cost 252 210 $1,002 $720 In 2020, Bonita 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 estimated manufacturing overhead of $8,354,000 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $478 ($1,480 $1,002) and Majestic $550 ($1,270 $720). 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 Bonita'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 Estimated Overhead Estimated Use of Cost Drivers Activity-Based Overhead Rate Cost Drivers Number of orders Purchasing Machine setups Machining Quality control Number of setups Machine hours Number of inspections $1,400,800 932,800 5,240,400 780,000 41,200 17,600 119,100 30,000 $34/order $53/setup $44/hour $26/inspection The cost drivers used for each product were: Cost Drivers Royale Total Purchase orders Machine setups 18,000 5,000 75,000 12,000 Majestic 23,200 12,600 44,100 18,000 41,200 17,600 119,100 30,000 Machine hours Inspections Royale Majestic Total assigned costs $ " Cost per unit $ $ 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 $ $Step by Step Solution
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