Schultz 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. The production cost computed per unit under traditional costing for each model in 2014 was as follows Traditional Costing Royale Majesti Direct materials Direct labor ($20 per hour) Manufacturing overhead ($38 per DLH) Total per unit c $700 120 228 $1,048 $420 100 190 $710 ost In 2014, Schultz 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 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 Estimat Overhead Ex Use of Activity-B Cost Drivers Overhead Rat $30/order 50/setuP 40/hour Cost Drivers Purchasing Machine setu Machining Quality control Number of orders Number of setups Machine hours Number of inspections 40,000 18,000 $1,200,000 900,00O 4,800,000 700,000 ps 120,000 28,000 25/inspection