SHOW ALL THE WORK PLEASE

B & B Electronics Company manufactures two large-screen television models: the Deluxe, which has been produced for many years and sells for $1,100, and the Flat, a new model, which sells for $1,250. Based on the following income statement for 2020, the CFO at B & B has decided to concentrate the marketing resources on the Flat model and to begin to phase out the Deluxe model.

B & B ELECTRONICS COMPANY Income Statement Year Ended December 31, 2020
		Flat			Deluxe			Total
Sales		$	5,000,000		$	24,200,000		$	29,200,000
Cost of goods sold			3,680,000			15,840,000			19,520,000
Gross margin			1,320,000			8,360,000			9,680,000
Selling and administrative expenses			752,000			6,072,000			6,824,000
Net profit		$	568,000		$	2,288,000		$	2,856,000
Units produced and sold			4,000			22,000
Net profit per unit sold			$142			$104

The standard unit costs for the Flat and Deluxe models are as follows:

		Flat		Deluxe
Direct materials		$650		$290
Direct labour:
Flat (3.5 hrs. $20/hr.)		70
Deluxe (1.5 hrs. $20/hr.)				30
Machine usage:
Flat (4 hrs. $25/hr.)		100
Deluxe (8 hrs. $25/hr.)				200
Manufacturing overhead		100		200
Standard cost		$920		$720

Manufacturing overhead was applied on the basis of machine hours at a predetermined rate of $25 per hour. B & Bs CFO is in favour of using an activity-based costing system and has gathered the following information about the companys manufacturing overhead costs for 2020:

		Units of the Cost Driver
Activity Centres and Cost Drivers		Activity Costs					Flat		Deluxe		Total
Soldering (number of solder joints)			$	924,000			270,000		1,270,000		1,540,000
Shipments (number of shipments)				820,000			5,200		15,300		20,500
Quality control (number of inspections)				1,080,000			19,000		53,000		72,000
Purchase orders (number of orders)				785,000			107,000		50,000		157,000
Machine power (machine hours)				96,000			16,000		176,000		192,000
Machine set-ups (number of set-ups)				1,095,000			4,000		6,000		10,000
Total traceable costs			$	4,800,000

Using activity-based costing, calculate the gross margin for Flat model and Deluxe model. (Round per machine hour to 5 decimal places, e.g. 15.21156, other intermediate calculations to 2 decimal places, e.g. 15.25 and final answers to 2 decimal places, e.g. 15.25%.)

		Flat		Deluxe
Gross margin		%		%

Using activity-based costing, determine whether B & B Electronics should continue to emphasize the Flat model and phase out the Deluxe model.

B & B Electronics ( should continue OR should not) continue with its plans to emphasize the Flat model and phase out the Deluxe model.