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 Royale Majestic Direct materials $650 $430 Direct labor ($20 per hour) 120 100 Manufacturing overhead ($41 per DLH) 246 205 Total per unit cost $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 par 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 Cost Drivers Estimated Overhead Estimated Use of Cost Drivers Activity-Based Overhead Rate Purchasing Number of orders $1,283,200 40,100 $32/order Machine setups Number of setups 918,500 16,700 $55/setup Machining Machine hours 5,155,700 119,900 $43/hour Quality control Number of inspections 743,600 28,600 $26/inspection The cost drivers used for each product were: Cost Drivers Purchase orders 17,000 Machine setups Machine hours 75,000 Royale Majestic Total 23,100 40,100 4,000 12,700 16,700 44,900 119.900 Inspections 12,000 16,600 28,600