Royale Majestic Problem 21-7A (Part Level Submission) Schultz Electronics manufa
ID: 2505128 • Letter: R
Question
Royale
Majestic
Problem 21-7A (Part Level Submission) Schultz Electronics manufactures two large-screen television models: the Royale, which sells for $1,530, and a new model, the Majestic, which sells for $1,180. The production cost computed per unit under traditional costing for each model in 2014 was as follows.Royale
Majestic
Direct materials $ 740 $480 Direct labor ($20 per hour) 120 80 Manufacturing overhead ($38 per DLH) 228 152 Total per unit cost $1,088 $712In 2014, Schultz manufactured 29,560 units of the Royale and 10,110 units of the Majestic. The overhead rate of $38 per direct labor hour was determined by dividing total expected manufacturing overhead of $8,153,000 by the total direct labor hours (214,553) for the two models.
Under traditional costing, the gross profit on the models was Royale $442 or ($1,530
Explanation / Answer
Royale Majestic Cost Drivers Drivers Used Cost Drivers Used Cost Total Cost Purchase orders 18970 682920 8030 289080 972000 Machine setups 5050 297950 8950 528050 826000 Machine hours 109800 3843000 48200 1687000 5530000 Inspections 11560 289000 21440 536000 825000 Total assigned costs 5112870 3040130 8153000 Units produced 29560 10110 Costs per unit 173 301
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