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television models: the R P4-2A Schultz Electronics manufactures two large-screen Assign onverhead torou using ABCandeval ate decision which sells for 6001 and a new model, the M Issue which sells for ST 300 duction cost computed per unit under traditional costing for each model in 2014 was as follows. (LO 4), AP Traditional Costing Royale Majestic LS 700 120 Direct materials Direct labor ($20 per hour) Manufacturing overhead ($38 per DLH) 22 Total per unit cost $420 100 190 710 $1,048 In 2014, Schultz manufatured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $38 per direct labor hour was determined by dividing total expected manufacturing overhead of S7,600,000 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $552 or (1,600 $1,048), and Majestic $590 or ($1,300 $710). Because of this difference, management is considering phasing out the Royale model and increasing the produc. tion 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, 2014. Activity- Based Overhead Rate $30/order $50/setup $40/hour Expected Estimated Use of Overhead Cost Drivers $1,200,00040,000 Activities Purchasing Machine setups Machining Cost Drivers Number of orders Number of setups Machine hours 900,000 18,000 4,800,000 120,000 Quality control Number of inspections 700,000 28,000 $25/inspection