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*Problem 7-28 Elliot-Jones manufactures two large-screen television models. The 65-inch nat-panel LED model has been in production since 2012 and sells for 900. The company
*Problem 7-28 Elliot-Jones manufactures two large-screen television models. The 65-inch nat-panel LED model has been in production since 2012 and sells for 900. The company introduced a 55-inch 4K ultra HD in 2016; it sells for $1,140. The company's income statement for the current year follows. Based on these results, management has decided to concentrate the company's marketing efforts on the 4K ultra HD model and begin to phase out the LED model. Income Statement For the Year Ended December 31 65" LED 55 4K Ultra HD Total Sales Revenue Cost of goods sold Gross profit Selling and administrative expenses 5,300,000 Operating income Units produced and sold Operating income per unit sold The unit costs for the two television models are as follows: 4,560,000 $22,560,000 3p212,400 15,012,400 1,347,600 7,547,600 978,000 6,278,000 369,600 S 1,269,600 $18,000,000 11,800,000 6,200,000 $ 900,000 $ 20,000 4,000 92.40 $45.00 $ 65" LED $352.00 18.00 220.00 $590.00 55" 4K Ultra HD Direct materials Direct labor Manufacturing overhead Total unit cost $656.00 42.00 105.10 5803.10 Mark Renn, Elliot-Jones controller, just attended a seminar on activity-based costing and believes the company should implement such a system. He has gathered the following annual information to explore the possibility. Traceable Number of Events Activity Cost Pool Cost Driver Costs 65 LED 55" 4K Ultra HD Total number of solder joints number of shipments $942,000 860,000 Quality control inspecting number of inspections ,248,000 950,000 70,400 750,000 $4,820,400 1,185,000 16,000 56,250 80,000 160,000 16,000 385,000 1,570,000 20,000 78,000 110,000 190,000 16,000 176,000 30,000 Shipping 4,000 21,750 Purchasing Machining Machine setups number of orders number of machine hours number of setups 14,000 Total traceable costs
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