it will be helpful for me if you answer the questions:

Austin Electronics manufactures two large-screen television models: the

Royale, which sells for $1,600, and a new model, the Majestic, which sells for

$1,300. Few per unit cost data are given:

Traditional Costing Royale Majestic

DM $700 $420

DL ($20 per hour) $120 $100

MOH ($38 per DLH) $228 $190

In 2017, Austin manufactured 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 $7,600,000 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 production of the Majestic model.

Before finalizing its decision, management asks Austin's controller to make an

analysis using activity-based costing (ABC). The controller accumulates the

following information about overhead for the year ended December 31, 2017.

Activities Cost

Drivers

Est. Overhead

Cost ($)

Activity

Level

Activity

Rate

Purchasing No. of orders 1,200,000 40,000 jQuery22407659733382161964_1597983059064

Machine

Setups

No. of setups 900,000 18,000 ??

Machining Machine

hours

4,800,000 120,000 ??

Quality

Control

No. of

inspections

700,000 28,000 ??

Cost

Drivers

Royale Majestic Total Activity

Level

Purchasing 17,000 23,000 40,000

Machine

Setups

5,000 13,000 18,000

Machining 75,000 45,000 120,000

Quality

Control

11,000 17,000 28,000

a) Calculate the activity rates for all the activity cost pools.

b) Assign the total 2017 manufacturing overhead costs to the two products

using activity based costing (ABC) and determine the overhead cost per

unit.

c) What was the cost per unit and gross profit of each model using ABC?

d) Explain the difference between the cost figures of Traditional and ABC

system.

e) Are management's future plans for the two models sound? Explain.