Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Schultz Electronics manufactures two ultra high-definition television models: the Royale which sells for $1,480, and a new model, the Majestic, which sells for $1,320. The

image text in transcribed
image text in transcribed
image text in transcribed
Schultz Electronics manufactures two ultra high-definition television models: the Royale which sells for $1,480, and a new model, the Majestic, which sells for $1,320. The production cost computed per unit under traditional costing for each model in 2017 was as follows. Traditional Costing Royale Majestic Direct materials $620 $420 Direct labor ($20 per hour) 120 100 Manufacturing overhead ($41 per DLH) 246 205 $986 $725 Total per unit cost In 2017,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 expected manufacturing overhead of $8,217,010 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $494 ($1,480- $986) and Majestic $595 ($1,320-$725) 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, 2017. Activity Estimated Expected Use of Activity-Based Overhead Cost Pools Cost Drivers Cost Drivers Overhead Rate Purchasing Number of orders $1,232,000 38,500 $32/order Machine setups Number of setups 862,410 16,910 $51/setup Machining Machine hours 5,293,200 120,300 $44/hour Quality control Number of inspections 28,600 $29/inspection 829,400 The cost drivers used for each product were: Cost Drivers Royale Majestic Total Purchase orders 16,100 22,400 38,500 Machine setups 12,600 4,310 16,910 Machine hours 74,900 45,400 120,300 Inspections 10,000 18,600 28,600 Assign the total 2017 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 Cost per unit $ 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 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

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Excise Tax Ozone Depleting Chemicals IRS Audit Techniques Guide

Authors: Internal Revenue Service

1st Edition

1304114279, 978-1304114273

More Books

Students also viewed these Accounting questions