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Pharoah Electronics manufactures two HD television models: the Royale, which sells for $ 1,652, and a new model, the Majestic, which sells for $1.298. The
Pharoah Electronics manufactures two HD television models: the Royale, which sells for $ 1,652, and a new model, the Majestic, which sells for $1.298. The production costs calculated per unit under traditional costing for each model in 2022 were as follows: Traditional Costing Royale Majestic $ 370 Direct materials $ 708 100 80 Direct labour ($ 20 per hour) 175 140 Manufacturing overhead ($ 35 per direct labour hour) $ 983 $ 590 Total per unit cost In 2022, Pharoah manufactured 23,600 units of the Royale and 11,800 units of the Majestic. The overhead rate of $ 35 per direct labour hour was determined by dividing total estimated manufacturing overhead of $ 5.8 million by the total direct labour hours ( 165,200) for the two models. Under traditional costing, the gross profit on the models was $ 669 for the Royale or ($ 1.652 - $ 983), and $ 708 for the Majestic or ($ 1.298 - $ 590). Because of this difference, management is considering phasing out the Royale model and increasing the production of the Majestic. The overhead rate of $ 35 per direct labour hour was determined by dividing total estimated manufacturing overhead of $5.8 million by the total direct labour hours ( 165,200) for the two models. Under traditional costing, the gross profit on the models was $ 669 for the Royale or ($ 1,652 - $ 983), and $ 708 for the Majestic or 1,298 - $ 590). Because of this difference, management is considering phasing out the Royale model and increasing the production o the Majestic model. Before finalizing its decision, management asks Pharoah'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, 2022: Activity Cost Pools Cost Drivers Estimated Overhead Estimated Use of Cost Drivers Activity-Based Overhead Rate Purchasing Number of orders $ 885,000 29,500 $ 30 per order Machine set-ups Number of set-ups 708,000 23,600 $30 per set-up Machining Machine hours 3,658,000 118.000 $31 per hour Quality control Number of inspections 531,000 5,900 $90 per inspection The cost drivers used for each product were as follows: Cost Drivers Royale Majestic Total Purchase orders 13,275 16,225 29,500 Machine set-ups 11,800 11.800 23,600 Machine hours 47.200 70.800 118.000 Inspections 2.655 3.245 5.900 (a) Accico the total 2009 martbedrect to the traduction - bati-ABCip, Assign the total 2022 manufacturing overhead costs to the two products using activity-based costing (ABC). ( decimal places, eg. 15.25.) Royale Majestic Per unit overhead cost $ $ e Textbook and Media
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