Problem 4 2A uitz Dectroecs costing for each mode in 2017 wa

Problem 4 2A uitz Dectroecs costing for each mode in 2017 was as follows eanufactures two ultra high definition television models: the Royale whch sellis for $t.480, and a new model, the Majestic. which sells for $1,270. The production cest compuced per ust under tradoon Traditional Costing Royale Majestic Direct materals Direct labor 1520 per hour) Manufacturing overhead Totsl per unt cos 400 100 per DH) 228 In :017, Schultz mavfactured 25,000 units of the Royale and 10,000 units of the Maesic. The overead rate of s3a per drect labor bour was determied by dividing total expected manufacturing overead of $7.908,000 by the total drect labor hours (200.000) for the two models reasing the production of the Hajestic model Before tralining its deosion, management asks Schultr\'s contrller to prepare an analysis using sctivty based coting(ABC) Te cotrotler accumulates the flowing information about averhead for the year ended December 31. 2017 Estimated Expected se of Activity-Based Cost Pools Purchasing Machine setups Number of setups Machine bhours 15,000 $51seup 18,000$41/her 836,000 676.000 Queity control Number of inspections 28,000epctien The cost drivers used for each product were Royale

Solution

STATEMENT SHOWING ACTIVITY RATE OF ACTIVITY POOL Activity Total Expected Activity ACTIVITY COST POOL Measures Overheads Activity Rate Purchase Orders 1178000 38000 31.00 Machine setup Setups 816,000 16,000 51.00 Machining MH 4,838,000 118,000 41.00 Quality Control Inspections 676,000 26,000 26.00 OH Assigned: Rate Royale majestic Activity Activity OH Activity OH Purchase 31 16000 496000 22000 682000 machine Setup 51 4000 204000 12000 612000 Machining 41 74000 3034000 44000 1804000 Quality Control 26 10000 260000 16000 416000 Total cost assigned 3994000 3514000 Divide: Number of units 25000 10000 OH cost per unit 159.76 351.4 Cost per unit: Royale Majestic material 600 390 labour 120 100 OH cost 159.76 351.4 Unit product 879.76 841.4 Gross Profit: Royale Majestic Selling price per unit 1480 1270 Less: Unit product cost 879.76 841.4 Gross profit 600.24 428.6