Schultz Electronics manufactures two ultra high-definition television models: the Royale which sells for $1,580, 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 Direct materials Direct labor ($20 per hour) Manufacturing overhead ($40 per DLH) Total per unit cost Royale $660 120 240 $1,020 Majestic $410 100 200 $710 In 2020. Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of s40 per direct labor hour was determined by dividing total estimated manufacturing overhead of $8,052,900 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profile on the models was Royale SSCO ($1,580 - $1,020) and Majestic $560 ($1,270 - $710). 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 Schulte'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 Estimated Estimated Use of Activity Based Cost Pools Cost Drivers Overhead Cost Drivers Overhead Rate Purchasing Number of orders $1,248,000 39,000 $32/order Machine setups Number of soups 918,000 18,000 $51/setup Machining Machine hours 5,077,800 120,000 $42/hour Quality control Number of inspections 309,100 27,900 $29/inspection Cost Drivers Purchase orders Machine setups Machine hours Inspections Royale 16,000 5,000 76,000 11,000 Majestic 23,000 13,000 44,900 16,900 Total 39,000 18,000 120,900 27.900 (a) your answer is correct Assign the total 2020 manufacturing overhead costs to the two products using activity-based costing (ABC) and determine the overhead cost per unit. (Round cost per unit to 2 decimal places, e.g. 12.25.) Royale Majestic Total assigned costs 4.228,000 3,774,900 Cost per unit 17.12 377.49 Click if you would like to show Work for this question Open Show Work SHOW SOLUTION SHOW ANSWER By accessing this question Assistance, you will learn while you eam points based on the Point Potential Policy set by your instructor (11) Calculate cost per unit of each model using ABC costing. (Round answers to 2 decimal places, c.9. 12.25.) Royale Majestic Cost per unit Click if you would like to show Work for this question: Open Show Work By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor
