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Sheridan Electronics manufactures two ultra-high-definition television models: the Royale, which sells for $1,580, and a new model, the Majestic, which sells for $1,320. The production
Sheridan Electronics manufactures two ultra-high-definition television models: the Royale, which sells for $1,580, and a new model, the Majestic, which sells for $1,320. The production cost computed per unit under traditional costing for each model in 2022 was as follows. Traditional Costing Royale Majestic Direct materials $640 $430 Direct labor ($20 per hour) 120 100 Manufacturing overhead ($42.053 per DLH) 252 210 Total per unit cost $1,012 $740 In 2022, Sheridan manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $42.053 per direct labor hour was determined by dividing total estimated manufacturing overhead of $8,410,600 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $568 ($1,580 $1,012) and Majestic $580 ($1,320 $740). 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 Sheridans controller to prepare an analysis using activity-based costing (ABC). The controller accumulates the following information about overhead for the year ended December 31, 2022. Activity Cost Pools Cost Drivers Estimated Overhead Estimated Use of Cost Drivers Activity-Based Overhead Rate Purchasing Number of orders $1,428,000 40,800 $35/order Machine setups Number of setups 1,058,400 19,600 $54/setup Machining Machine hours 5,155,700 119,900 $43/hour Quality control Number of inspections 768,500 26,500 $29/inspection The cost drivers used for each product were: Cost Drivers Royale Majestic Total Purchase orders 18,000 22,800 40,800 Machine setups 6,000 13,600 19,600 Machine hours 75,000 44,900 119,900 Inspections 10,000 16,500 26,500 (a) Assign the total 2022 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 $enter a dollar amount $enter a dollar amount Cost per unit $enter a dollar amount rounded to 2 decimal places $enter a dollar amount rounded to 2 decimal places eTextbook and Media Save for Later
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