Question

Schultz Electronics manufactures two ultra high-definition television models: the Royals which sells for $1,630, and a new model, the Majestic, which se s for $1,270. The production cost computed per unit under traditional costing for each modelin 2020 was as follows. Royale Majestic 420 Traditional Costing Direct materials Direct labor ($20 per hour) Manufacturing overhead (S41 per DLH) Total per unit cost 120100 246 8966 5725 In 2020. Schultz manufactured 25.000 units of the Revale and 10.000 units of the Majestic The overhead rate of $41 per direct labor hour was determined by dividing total estimated manufacturing overhead of Se, 135,200 by the total direct labor hours (200,000 for the two models. Under traditional costing, the gross profit on the models was Royale $664 ($1.630-S966) and Majestic $525 ($1,270 - $725). Because of this difference, management is considering phasing out the Royale model and increasing the production of the Majestic model. Before finalzing its decision management asics Schultz's controller to prepare an analysis using activity-based costing (ABC). The controller accumulates the following information about overhead for the year anded December 31, 2020. Activity Cost Pools Cost Drivers Purchasing Number of orders Machine setups Number of setups Machining Machine hours Quality control Number of inspections Estimated Overhead $1.258.600 1026,000 5,035.600 914,800 Estimated Use of Activity-Based Cost Drivers Overhead Rate 40,600 S31/order 19,000 $54 setup 119,900 $42/hour 29,100 $28/inspection The cost drivers used for each product wars: Cost Drivers Purchase orders Machine setups Machine hours Inspections Royale Majestic Total 18,000 22,600 40,600 5,000 14,000 19,000 74,000 45,900 119,900 11000 18,100 29,100 Your answer is correct. Assign the total 2020 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, eg 12.25.) Royale Majestic Total assigned costs $ Cost per unit $ 4244,000.00 159.75 $ $ 3951,200.00 289.12 e Textbook and Media Attempts: 2 of 7 used (61) Calculate cost per unit of each model using ABC costing-(Round answers to 2 decimal places, eg 12.25.) Royale Majestic Cost per units

Answer 1

Solution

	Royale	Majestic
Total cost per unit	$      889.76	$      919.12

Working

	Royale	Majestic
Direct material	$      600.00	$      430.00
Direct labor	$      120.00	$      100.00
Overhead applied	$      169.76	$      389.12
Total cost per unit	$      889.76	$      919.12