- Schultz Electronics Manufactures Two Ultra High Definition Television Models The Royale Which Sells For 1 580 And A N 1 (96.33 KiB) Viewed 93 times
costing. (Round answers to 2 decimal places, e.g.
12.25.)
Royale
Majestic
$
$
eTextbook and Media
Calculate the gross profit of each model using ABC
costing. (Round answers to 2 decimal places, e.g.
12.25.)
Royale
Majestic
$
$
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 $1.270. The production cost computed per unit under traditional costing for each model in 2020 was as follows. . Traditional Costing Royale Majestic Direct materials $640 $410 120 100 Direct labor ($20 per hour) ) Manufacturing overhead ($42 per DLH) 252 210 Total per unit cost $1.012 $720 $ 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 $8,421.200 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 $550 ($1.270 - $720). 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 Estimated Overhead Estimated Use of Cost Drivers Activity-Based Overhead Rate Cost Drivers Purchasing Number of orders $1.215,200 39.200 $31/order Machine setups Number of setups 1.006,500 18,300 $55/setup Machining 5,368,500 119,300 $45/hour Machine hours Number of inspections Quality control 831,000 27.700 $30/inspection The cost drivers used for each product were: Cost Drivers Royale Majestic Total Purchase orders 17.000 22,200 39,200 Machine setups 5.000 13,300 18,300 Machine hours 75.000 44,300 119.300 Inspections 11.000 16.700 27,700 (a) 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, eg. 12.25.) Royale Majestic Total assigned costs $ $ Cost per unit $ $