Question

Schultz Electronics manufactures two ultra high-definition television models: the Royale which sells for $1,630, and a new model, the Majestic, which sells for $1,270. The production cost computed per unit under traditional costing for each model in 2020 was as follows. Traditional Costing Direct materials Direct labor ($20 per hour) Manufacturing overhead ($41 per DLH) Total per unit cost Royale $600 120 Majestic $430 100 205 $735 246 $966 In 2020, Schultz manufactured 25,000 units of the Royale 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 $8,135,200 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 - $966) and Majestic $535 ($1,270 - $735). 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, 2020.

Answer 1

Requirement (a) Royale Majestic Overhead : Purchasing Machine Setup Machining Quality control $ $ $ $ 558,000 $ 700,600 270,000 $ 756,000 3,108,000 $1,927,800 308,000 $ 506,800 Total Assigned Costs $ Number of Unit Cost Per Unit $ 4,244,000 $3,891,200 25000 10000 169.76 $ 389.12 Note : Do Comment For Any Issues