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Schultz Electronics manufactures two ultra high-denition television models: the Royale which sells for $1,480, and a new model, the Majestic, which sells for $1,270. The
Schultz Electronics manufactures two ultra high-denition 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 Royale Majestic Direct materials $650 $420 Direct labor ($20 per hour) 120 100 Manufacturing overhead ($42 per DLH) 252 210 Total per unit cost $1,022 $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 ($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 nalizing its decision, management asks Schultz's controllerto prepare an analysis using activity-based costing (ABC). The controller accumulates the following information about overhead for the year ended December 31, 2020. Before nalizing 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 Royale Majestic Total Purchase orders 18,000 23,100 41,100 Machine setups 5,000 12,300 17,300 Machine hours 75,000 45,600 120,600 Inspections 12,000 18,200 30,200 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, 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 gross prot per unit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.) Royale Majestic Gross prot per unit 55 $
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