- Metlock Electronics Manufactures Two Hd Television Models The Royale Which Sells For 1 204 And A New Model The Maje 1 (289.81 KiB) Viewed 93 times
Metlock Electronics manufactures two HD television models: the Royale, which sells for $1,204, and a new model, the Majestic, which sells for $946. The production costs calculated per unit under traditional costing for each model in 2022 were as follows: Traditional Costing Royale Majestic Direct materials $516 $274 Direct labour ($20 per hour) 100 80 Manufacturing overhead ($35 per direct labour hour) 175 140 Total per unit cost $791 $494 In 2022, Metlock manufactured 17,200 units of the Royale and 8,600 units of the Majestic. The overhead rate of $35 per direct labour hour was determined by dividing total estimated manufacturing overhead of $4.2 million by the total direct labour hours (120,400) for the two models. Under traditional costing, the gross profit on the models was $413 for the Royale or ($1,204 - $791), and $452 for the Majestic or ($946 - $494). 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 Metlock'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, 2022:
Estimated Overhead Activity-Based Overhead Rate Activity Cost Pools Estimated Use of Cost Drivers Cost Drivers Purchasing Number of orders $645,000 21,500 $30 per order Machine set-ups Number of set-ups 516,000 17,200 $30 per set-up Machining Machine hours 2,666,000 86,000 $31 per hour Quality control Number of inspections 387,000 4,300 $90 per inspection The cost drivers used for each product were as follows: Cost Drivers Royale Majestic Total Purchase orders 9,675 11,825 21,500 Machine set-ups 8,600 8,600 17,200 Machine hours 34,400 51,600 86,000 Inspections 1,935 2,365 4,300
(a) Assign the total 2022 manufacturing overhead costs to the two products using activity-based costing (ABC). (Round answers to 2 decimal places, e.g. 15.25.) Royale Majestic Per unit overhead cost $ $ eTextbook and Media Save for Later Attempts: unlimited Submit Answer (b) The parts of this
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