Problem 17-2A Schultz Electronics manufactures two ultra high-definition television models: the Royale which sells for $1,580, and a new model, the Majestic, which sells for $1,270. The production cost computed per unit under traditional costing for each model in 2017 was as follows. Traditional Costing Royale Majestic Direct materials $640 $430 Direct labor ($20 per hour) 120 100 Manufacturing overhead ($40 per DLH) 240 200 $1,000 $730 Total per unit cost In 2017, Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $40 per direct labor hour was determined by dividing total expected manufacturing overhead of $7,969,040 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $580 ($1,580 $1,000) and Majestic $540 ($1,270 management is considering phasing out the Royale model and increasing the production of the Majestic model. $730). Because of this difference, 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 Expected Use of Activity Estimated Overhead Based Overhead Cost Pools Cost Drivers Drivers Rate Number of orders Purchasing $1,331,200 41,600 $32/order Machine Number of 913,640 17,570 $52/setup setups setups Machine hours Machining 4,952,800 120,800 $41/hour Quality control Number of 771,400 26,600 $29/inspection inspections The cost drivers used for each product were: Cost Drivers Royale Majestic Total Purchase orders 23,700 17,900 41,600 Machine setups 5,370 12,200 17,570 Machine hours 75,800 45,000 120,800 Inspections 10,400 16,200 26,600 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 Cost per unit Calculate cost per unit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.) t materials $640 Direct labor ($20 per hour) 120 100 Manufacturing overhead ($40 per DLH) 240 200 $1,000 $730 Total per unit cost In 2017, Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $40 per direct labor hour was determined by dividing total expected manufacturing overhead of $7,969,040 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $580 ($1,580 $1,000) and Majestic $540 ($1,270 - $730). 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 Expected Use of Activity- Based Activity Estimated Cost Overhead Overhead Cost Pools Cost Drivers Drivers Rate Number of Purchasing $1,331,200 $32/order 41,600 orders Machine of Number etups 913,640 $52/setup 17,570 etups Machine Machining $41/hour 4,952,800 120,800 hours Quality control Number of 771,400 26,600 $29/inspection inspections The cost drivers used for each product were: Cost Drivers Royale Majestic Total Purchase orders 17,900 23,700 41,600 Machine setups 5,370 12,200 17,570 Machine hours 75,800 45,000 120,800 Inspections 10,400 16,200 26,600 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 Cost per unit 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 Calculate gross profit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.) Royale Majestic Gross profit Question Attempts: Unlimited