Schultz electronics manufactures two large-screen television models:

P4-2A Schultz Electronics manufactures two large-screen television models: the Royale which sells for$1,600 and a new model, the Majestic, which sells for$1,300 The production cost computed per unit under traditional costing for each model is 2014 was as follows.

Traditional Costing

Royale

Majestic

Direct materials

$700

$420

Direct labor ($20 per hour)

120

100

Mfg overhead ($38 per DLH)

228

190

Total per unit cost

$1,048

$710

 

In 2014, Schultz manufactured25,000 units of the Royale and10,000 units of the Majestic. The overhead rate of $38 per direct labor hour was determined by dividing total expected manufacturing overhead of $7,600,000 by the direct labor hours 200,000 for the two models

 

 

Under traditional costing, the gross profit on the models was: Royale $552 or ($1,600 – $1,048) and Majestic $590 or ($1,300 – $710)  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, 2014.

 

Activity

Cost Driver

Estimated
Overhead

Expected
Use of
Cost
Drivers

Activity-
Based
Overhead
Rate

 

Purchasing

Number of orders

$1,200,000

40,000

$30

per order

Machine setups

Number of setups

900,000

18,000

50

per setup

Machining

Machine hours

4,800,000

120,000

40

per hour

Quality control

Number of inspections

700,000

28,000

25

per inspection

 

The cost drivers used for each product were:

Cost Driver

Royale

Majestic

Total

Purchase orders

17,000

23,000

40,000

Machine setups

5,000

13,000

18,000

Machine hours

75,000

45,000

120,000

Inspections

11,000

17,000

28,000

 

Instructions

a. Assign the total 2014 manufacturing overhead costs to the two products using activity-based costing (ABC).

b What was the cost per unit and gross profit of each model using ABC costing?

c Are management’s future plans for the two models sound? Enter your answer in the block below

Custom Writings Help
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

Essays

Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

Admissions

Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

Reviews

Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

Reviews

Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.

})();