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 $1,320. 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 ($42 per DLH) 252 210 Total per unit cost $1,012 $740 In 2017, Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $42 per direct labor hour was determined by dividing total expected manufacturing overhead of $8,377,580 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $568 ($1,580 – $1,012) and Majestic $580 ($1,320 – $740). 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. Activity Cost Pools Cost Drivers Estimated Overhead Expected Use of Cost Drivers Activity-Based Overhead Rate Purchasing Number of orders $1,417,500 40,500 $35/order Machine setups Number of setups 1,048,680 19,420 $54/setup Machining Machine hours 5,134,200 119,400 $43/hour Quality control Number of inspections 777,200 26,800 $29/inspection The cost drivers used for each product were: Cost Drivers Royale Majestic Total Purchase orders 17,700 22,800 40,500 Machine setups 5,820 13,600 19,420 Machine hours 74,500 44,900 119,400 Inspections 10,300 16,500 26,800 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 $ $ eTextbook and Media 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 $ $ eTextbook and Media Calculate gross profit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.) Royale Majestic Gross profit $ $
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 $1,320. 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 ($42 per DLH) 252 210 Total per unit cost $1,012 $740 In 2017, Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $42 per direct labor hour was determined by dividing total expected manufacturing overhead of $8,377,580 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $568 ($1,580 – $1,012) and Majestic $580 ($1,320 – $740). 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. Activity Cost Pools Cost Drivers Estimated Overhead Expected Use of Cost Drivers Activity-Based Overhead Rate Purchasing Number of orders $1,417,500 40,500 $35/order Machine setups Number of setups 1,048,680 19,420 $54/setup Machining Machine hours 5,134,200 119,400 $43/hour Quality control Number of inspections 777,200 26,800 $29/inspection The cost drivers used for each product were: Cost Drivers Royale Majestic Total Purchase orders 17,700 22,800 40,500 Machine setups 5,820 13,600 19,420 Machine hours 74,500 44,900 119,400 Inspections 10,300 16,500 26,800 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 $ $ eTextbook and Media 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 $ $ eTextbook and Media Calculate gross profit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.) Royale Majestic Gross profit $ $
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 $1,320. 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 ($42 per DLH) 252 210 Total per unit cost $1,012 $740 In 2017, Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $42 per direct labor hour was determined by dividing total expected manufacturing overhead of $8,377,580 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $568 ($1,580 – $1,012) and Majestic $580 ($1,320 – $740). 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. Activity Cost Pools Cost Drivers Estimated Overhead Expected Use of Cost Drivers Activity-Based Overhead Rate Purchasing Number of orders $1,417,500 40,500 $35/order Machine setups Number of setups 1,048,680 19,420 $54/setup Machining Machine hours 5,134,200 119,400 $43/hour Quality control Number of inspections 777,200 26,800 $29/inspection The cost drivers used for each product were: Cost Drivers Royale Majestic Total Purchase orders 17,700 22,800 40,500 Machine setups 5,820 13,600 19,420 Machine hours 74,500 44,900 119,400 Inspections 10,300 16,500 26,800 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 $ $ eTextbook and Media 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 $ $ eTextbook and Media Calculate gross profit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.) Royale Majestic Gross profit $ $
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 $1,320. 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 ($42 per DLH)
252
210
Total per unit cost
$1,012
$740
In 2017, Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $42 per direct labor hour was determined by dividing total expected manufacturing overhead of $8,377,580 by the total direct labor hours (200,000) for the two models.
Under traditional costing, the gross profit on the models was Royale $568 ($1,580 – $1,012) and Majestic $580 ($1,320 – $740). 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.
Activity Cost Pools
Cost Drivers
Estimated Overhead
Expected Use of Cost Drivers
Activity-Based Overhead Rate
Purchasing
Number of orders
$1,417,500
40,500
$35/order
Machine setups
Number of setups
1,048,680
19,420
$54/setup
Machining
Machine hours
5,134,200
119,400
$43/hour
Quality control
Number of inspections
777,200
26,800
$29/inspection
The cost drivers used for each product were:
Cost Drivers
Royale
Majestic
Total
Purchase orders
17,700
22,800
40,500
Machine setups
5,820
13,600
19,420
Machine hours
74,500
44,900
119,400
Inspections
10,300
16,500
26,800
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
$
$
eTextbook and Media
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
$
$
eTextbook and Media
Calculate gross profit of each model using ABC costing. (Round answers to 2 decimal places, e.g. 12.25.)
Royale
Majestic
Gross profit
$
$
Definition Definition Total cost of procuring or producing a product or the cost that an individual or business owner undertakes for the manufacturing of goods.
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