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Please do cost per unit and gross profit. Thank you. Schultz Electronics manufactures two ultra high-definition television models: the Royale which sells for $1,580, and
Please do cost per unit and gross profit. Thank you.
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 ($41 per DLH) Total per unit cost Royale $650 120 Majestic $430 100 205 246 $1,016 $735 In 2020, Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $41 per direct labor hour was determined by dividing total estimated manufacturing overhead of $8,101,000 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $564 ($1,580 - $1,016) and Majestic $535 ($1,270 - $735). 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 Schultz'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 Purchasing Machine setups Machining Quality control Cost Drivers Number of orders Number of setups Machine hours Number of inspections Estimated Overhead $1,283,200 918,500 5,155,700 743,600 Estimated Use of Cost Drivers 40,100 16,700 119,900 28,600 Activity-Based Overhead Rate $32/order $55/setup $43/hour $26/inspection The cost drivers used for each product were: Cost Drivers Purchase orders Machine setups Machine hours Inspections Royale 17,000 4,000 75,000 12,000 Majestic 23,100 12,700 44,900 16,600 Total 40,100 16,700 119,900 28,600 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 $ $ Calculate gross profit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.) Royale Majestic Gross profit $ $Step by Step Solution
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