Question 3 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 $1,320. The production cost computed per unit under traditional costing for each model in 2020 was as follows. Royale $650 Traditional Costing Direct materials Direct labor ($20 per hour) Manufacturing overhead ($42 per DLH) Total per unit cost Majestic $400 100 120 210 252 $1,022 $710 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 $8,392,200 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $558 ($1,580 $1,022) and Majestic $610 ($1,320 - $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. Estimated Overhead Estimated Use of Cost Drivers Activity-Based Overhead Rate Cost Drivers $34/order Activity Cost Pools Purchasing Machine setups Machining Quality control $53/setup Number of orders Number of setups Machine hours Number of inspections $1,329,400 932,800 5,332,500 797,500 39,100 17,600 118,500 27,500 $45/hour $29/inspection The cost drivers used for each product were: Cost Drivers Majestic Purchase orders Royale 17,000 5,000 74,000 10,000 Machine setups Total 39,100 17,600 118,500 22,100 12,600 44,500 17,500 Machine hours Inspections 27,500 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 $ A Cost per unit LINK TO TEXT VIDEO: SIMILAR PROBLEM Calculate cost per unit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.) Royale Majestic Cost per units Calculate gross profit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.) Royale Majestic Gross profit