Elliot-Jones manufactures two large-screen television models. The 65-inch fl at-panel LED model has been in production since 2012 and sells for $900. The company introduced a 55-inch 4K ultra HD in 2016; it sells for $1,140. The company's income statement for the current year follows. Based on these results, management has decided to concentrate the company's marketing efforts on the 4K ultra HD model and begin to phase out the LED model.

The unit costs for the two television models are as follows:

Mark Renn, Elliot-Jones' controller, just attended a seminar on activity-based costing and believes the company should implement such a system. He has gathered the following annual information to explore the possibility

Required
a. Calculate the activity rate for each activity cost pool.
b. Allocate overhead costs to each of the products using activity-based costing.
c. Calculate the total product cost of each product using activity-based costing.
d. Are the product costs you calculated in part (c) the total costs of the two products? Why or why not?
e. Evaluate Elliot-Jones’ decision to focus on the 55″ 4K Ultra HD television and phase out the 65-inch LED television.

f. In what other ways could Elliot-Jones' use the activity-based cost information calculated in part (c)?

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Elliot-Jones Income Statement For the Year Ended December 31 65" LED 55" 4K Ultra HD Total Sales revenue Cost of goods sold Gross margin Selling and administrative expenses Operating income $18,000,000 $4,560,000 $22,560,000 15,012 400 7,547,600 6,278,000 900,000s 369,600 1.269 600 11.800,000 3212400 1,347,600 978,000 6,200,000 5,300,000 Units produced and sold Operating income per unit sold 4,000 45.00 9240 20,000 Direct materials Direct labor Manufacturing overhead Total unit cost 65" LED $352.00 18.00 220.00 590.00 55" 4K Ultra HD $656.00 42.00 105.10 803.10 Traceable Costs Number of Events 55" 4K Ultra HDTotal Activity Cost Pool Soldering Shipping Quality control inspecting Purchasing Machining Machine setups Cost Driver 65" LED number of solder joints 942,000 1,185,000 385,0001,570,000 860,000 16,000 248,000 56,250 950.CO 80.coo 70,400 160,000 50,000 16,000 number of shipments number of inspections umber of orders number of number of setups 4,000 21,750 110,000 6,000 14,000 20,000 78,000 190,000 176,000 30,000 machine hours Total traceable costs 54,820,400