Problem 4-2A a, b1-b2 (Video) (Part Level Submission) Schultz Electronics manufactures two ultra high-definition television models: the Royale which sells for $1,530, 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 $680 120 Majestic $390 100 205 246 $1,046 $695 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 $8,178,000 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $484 ($1,530 - $1,046) and Majestic $575 ($1,270 - $695). 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. Estimated Use of Cost Drivers Activity Cost Pools Purchasing Machine setups Machining Quality control Cost Drivers Number of orders Number of setups Machine hours Number of inspections Estimated Overhead $1,292,800 994,500 5,095,500 795,200 40,400 19,500 118,500 28,400 Activity-Based Overhead Rate $32/order $51/setup $43/hour $28/inspection The cost drivers used for each product were: Cost Drivers Total Royale 17,000 Purchase orders Machine setups Machine hours Inspections 6,000 74,000 12,000 Majestic 23,400 13,500 44,500 16,400 40,400 19,500 118,500 28,400 (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 4,368,000 3,810,000 Cost per unit 174.72 381.00 Click if you would like to show Work for this question: Open Show Work SHOW SOLUTION SHOW ANSWER LINK TO TEXT VIDEO: SIMILAR PROBLEM Attempts: 1 of 10 used (61) Your answer is correct. 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 974.721 871.00 Click if you would like to Show Work for this question: Open Show Work SHOW SOLUTION SHOW ANSWER LINK TO TEXT VIDEO: SIMILAR PROBLEM Attempts: 1 of 10 used (62) Calculate gross profit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.) Royale Majestic Gross profit
