Problem 5.37A a-b Jacobson Electronics manufactures two HD television models: the Royale, which sells for $1,400, and a new model, the Majestic, which sells for $1,100. The production costs calculated per unit under traditional costing for each model in 2020 were as follows: Traditional Costing Royale Majestic Direct materials $600 $320 Direct labour ($20 per hour) 100 80 Manufacturing overhead ($35 per direct labour hour) 175 140 Total per unit cost $875 $540 In 2020, Jacobson manufactured 20,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $35 per direct labour hour was determined by dividing total estimated manufacturing overhead of $4.9 million by the total direct labour hours (140,000) for the two models. Under traditional costing, the gross profit on the models was $525 for the Royale or ($1,400 - $875), and $560 for the Majestic or ($1,100 - $540). 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 Jacobson'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, 2020: Estimated Estimated Use Activity-Based Activity Cost Pools Cost Drivers Overhead of Cost Drivers Overhead Rate Purchasing Number of orders $750,000 25,000 $30 per order Machine set-ups Number of set-ups 600,000 20,000 30 per set-up Machining Machine hours 3,100,000 100,000 31 per hour Quality control Number of inspections 450,000 5,000 90 per inspectionThe cost drivers used for each product were as follows: Cost Drivers Royale Majestic Total Purchase orders 11,100 13,900 25,000 Machine set-ups 11,400 8,600 20,000 Machine hours 37,800 62,200 100,000 Inspections 1,900 3,100 5,000 Assign the total 2020 manufacturing overhead costs to the two products using activity-based costing (ABC). (Round answers to 2 decimal places, e.g. 15.25.) Royale Majestic Per unit overhead cost $ What was the cost per unit and gross profit of each model using ABC costing? (Round answers to 2 decimal places, e.g. 15.25.) Royale Majestic Per unit cost Gross profit per unit $
