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 Direct materials Direct labor ($20 per hour) Manufacturing overhead ($40 per DLH) Total per unit cost Royale Majestic $660 $410 120 100 240 200 $1,020 $710 In 2020, Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $40 per direct labor hour was determined by dividing total estimated manufacturing overhead of $8,052,900 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $560 ($1,580 - $1,020) and Majestic $560 ($1,270 - $710). 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-Based Overhead Rate Activity Cost Pools Cost Drivers Estimated Overhead Estimated Use of Cost Drivers Purchasing Number of orders $1,248,000 39,000 $32/order Machine setups Number of setups 918,000 18,000 $51/setup Machining Machine hours 5,077,800 120,900 $42/hour