Smart Electronics manufactures two types of gaming consoles, Models M-11 and R-24. Currently, the company allocates overhead costs based on direct labor hours; the total overhead cost for the past year was 80,000. Additional cost information for the past year is presented below. Total Direct Direct Costs Selling Price Product Name Labor Hours Units Sold per Unit per Unit M-11 650 1,300 10 90 R-24 150 1,500 30 60 Recently, the company lost bids on a contract to sell Model M-11 to a local wholesaler and was informed that a competitor offered a much lower price. Smart's controller believes that the cost reports do not accurately reflect the actual manufacturing costs and product profitability for these gaming consoles. He also believes that there is enough variation in the production process for Models M-11 and R-24 to warrant a better cost allocation system. Given the nature of the electronic gaming market, setting competitive prices is extremely crucial. The controller has decided to try activity-based costing and has gathered the following information: Number of Material Number of Setups Number of Components Movements M-11 3 17 15 R-24 33 35 Total activity cost 20,000 50,000 10,000 The number of setups, number of components, and number of material movements have been identified as activity-cost drivers for overhead. 7 1.) Using Smart's current costing system, calculate the gross margin per unit for Model M-11 and for Model R- 24. Assume no beginning or ending inventory. Show your calculations. Check numbers: Model M-11 Gross Margin per unit = $30. Model R-24 Gross Margin per unit = $20. Hint: First, calculate the plantwide rate and show the formula and your calculations. Subsequent to calculating the Gross Margins, discuss the calculations you made, and why what are you trying to show here? Model M-11: Calculate the overhead cost allocated (per unit): Insert Header Insert Header Insert Header Total Gross margin per unit Model R-24: Calculate the overhead cost allocated (per unit): Insert Header Insert Header Insert Header Total Gross margin per unit