Schultz Electronics manufactures two ultra high-definition television models: the Royale which sells for $1,530, and a...

  

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Schultz Electronics manufactures two ultra high-definition television models: the Royale which sells for $1,530, and a new model, the Majestic, which sells for $1,320. The production cost computed per unit under traditional costing for each model in 2017 was as follows. Traditional Costing Royale Majestic Direct materials $690 $410 Direct labor ($20 per hour) 120 100 Manufacturing overhead ($41 per DLH) 246 205 Total per unit cost $1,056 $715 In 2017, Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $41 per direct labor hour was determined by dividing total expected manufacturing overhead of $8,256,800 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $474 ($1,530 - $1,056) and Majestic $605 ($1,320 - $715). 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, 2017. Activity Estimated Expected Use of Activity-Based Cost Pools Cost Drivers Overhead Cost Drivers Overhead Rate Purchasing Number of orders $1,255,500 40,500 $31/order Machine setups Number of setups 996,600 18,120 $55/setup Machining Machine hours 5,155,700 119,900 $43/hour Quality control Number of inspections 849,000 28,300 $30/inspection The cost drivers used for each product were: Cost Drivers Royale Majestic Total Purchase orders 17,700 22,800 40,500 Machine setups 5,820 12,300 18,120 Machine hours 74,300 45,600 119,900 (a) Your answer is correct. Assign the total 2017 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, e.g. 12.25.) Royale Majestic Total assigned costs 4402700 $ 3854100 Cost per unit 176.11 $ 385.41 eTextbook and Media Attempts: 3 of 7 used (b1) Calculate cost per unit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.) Royale Majestic Cost per unit $ $ Attempts: 0 of 7 used Save for Later Submit Answer Schultz Electronics manufactures two ultra high-definition television models: the Royale which sells for $1,530, and a new model, the Majestic, which sells for $1,320. The production cost computed per unit under traditional costing for each model in 2017 was as follows. Traditional Costing Royale Majestic Direct materials $690 $410 Direct labor ($20 per hour) 120 100 Manufacturing overhead ($41 per DLH) 246 205 Total per unit cost $1,056 $715 In 2017, Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $41 per direct labor hour was determined by dividing total expected manufacturing overhead of $8,256,800 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $474 ($1,530 - $1,056) and Majestic $605 ($1,320 - $715). 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, 2017. Activity Estimated Expected Use of Activity-Based Cost Pools Cost Drivers Overhead Cost Drivers Overhead Rate Purchasing Number of orders $1,255,500 40,500 $31/order Machine setups Number of setups 996,600 18,120 $55/setup Machining Machine hours 5,155,700 119,900 $43/hour Quality control Number of inspections 849,000 28,300 $30/inspection The cost drivers used for each product were: Cost Drivers Royale Majestic Total Purchase orders 17,700 22,800 40,500 Machine setups 5,820 12,300 18,120 Machine hours 74,300 45,600 119,900 (a) Your answer is correct. Assign the total 2017 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, e.g. 12.25.) Royale Majestic Total assigned costs 4402700 $ 3854100 Cost per unit 176.11 $ 385.41 eTextbook and Media Attempts: 3 of 7 used (b1) Calculate cost per unit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.) Royale Majestic Cost per unit $ $ Attempts: 0 of 7 used Save for Later Submit Answer

Answer rating: 100% (QA)

Allocation of Overhead Cost Under ABC Costing Royale Majestic Total Purchasing 564400 ... View the full answer