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 $1,270. 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 ($42 per DLH) Total per unit cost Royale $650 120 252 $1,022 Majestic $420 100 210 $730 In 2020, Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $42 per direct labor hour was determined by dividing total estimated manufacturing overhead of $8.476,500 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $458 ($1480 - $1.022) and Majestic $540 (51.270 - $730). 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 Cost Drivers Number of orders Number of setus Estimated Overhead $1,274.100 899.500 Estimated Use of Cost Drivers 41.100 12.300 Activity-Based Overhead Rate $31/order $52 setup ideo Assistance Question 5 of 7 0/ 1.5 (ZUUUUUJ Tor the two models. Under traditional costing, the gross profit on the models was Royale $458 ($1,480 - $1,022) and Majestic $540 ($1,270 - $730). 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 Estimated Estimated Use of Activity-Based Cost Pools Cost Drivers Overhead Cost Drivers Overhead Rate Purchasing Number of orders $1,274,100 41.100 $31/order Machine setups Number of setups 899,600 17,300 $52/setup Machining Machine hours 5,427,000 120.600 $45/hour Quality control Number of inspections 875.800 30.200 $29/inspection The cost drivers used for each product were: Cost Drivers Purchase orders Machine setups Machine hours Inspections Royale 18,000 5.000 75.000 12.000 Majestic 23.100 12.300 45.600 18.200 Total 41.100 171300 120.000 30,200 (a) * Your answer is incorrect. 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, eg. 12.25.) Royale Majestic Total assigned costs $ 4320.610 $ 3,896,400 Cost per unit S 17282 $ 389.64 e Textbook and Media Save forgoter Attempts: 2 of 5 used Submit Answer Question Part Score 0/0.5
