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 Royale Majestic $600 $410 Direct labor ($20 per hour) 120 100 Manufacturing overhead ($43 per DLH) 258 215 Total per unit cost $978 $725 In 2020, Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $43 per direct labor hour was determined by dividing total estimated manufacturing overhead of $8,577,700 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $502 ($1,480 - $978) and Majestic $545 ($1,270 - $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, 2020. Activity Cost Pools Cost Drivers Estimated Overhead Estimated Use of Cost Drivers Activity-Based Overhead Rate Purchasing Number of orders $1,346,400 40,800 $33/order Machine setups Number of setups 956,800 18,400 $52/setup Machining Machine hours 5,386,500 119,700 $45/hour Quality control Number of inspections 888,000 29,600 $30/inspection The cost drivers used for each product were: Cost Drivers Royale Majestic Total Purchase orders 17,000 23,800 40,800 Machine setups 5,000 13,400 18,400 Machine hours 74,000 Inspections 11,000 45,700 119,700 18,600 29,600