2. Austin Electronics manufactures two large-screen television models: theRoyale, which sells for $1,600, and a new model, the Majestic, which sells for$1,300. Few per unit cost data are given:Traditional CostingDMRoyale$850Majestic$570DL ($20 per hour)MOH ($38 per DLH)$140$248$100$190In 2017, Austin manufactured 25,000 units of the Royale and 10,000 units of theMajestic. The overhead rate of $38 per direct labor hour was determined bydividing total expected manufacturing overhead of $7,600,000 by the total directlabor hours (200,000) for the two models.Management is considering phasing out the Royale model (comparatively lowprofit) and increasing the production of the Majestic modelBefore finalizing its decision, management asks Austin's controller to prepare ananalysis using activity-based costing (ABC). The controller accumulates thefollowing information about overhead for the year ended December 31, 2017.Est. Overhead Activity| Level40,00018,000ActivitiesCostActivityRate??DriversCost ($)No. of orders 1,200,000No. of setups 900,000PurchasingMachine??SetupsMachiningMachinehoursNo. of4,800,000120,000??700,00028,000QualityControl??inspectionsCostRoyaleMajesticTotal ActivityDriversLevelPurchasing17,0005,00023,00013,00040,00018,000MachineSetupsMachiningQualityControl75,00011,000| 45,00017,000120,00028,000 a) Calculate the activity rates for all the activity cost pools.b) Assign the total 2017 manufacturing overhead costs to the two productsusing activity based costing (ABC) and determine the overhead cost perunit.

Name: 2. Austin Electronics manufactures two large-screen television models
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Description: 2. Austin Electronics manufactures two large-screen television models: theRoyale, which sells for $1,600, and a new model, the Majestic, which sells for$1,300. Few per unit cost data are given:Traditional CostingDMRoyale$850Majestic$570DL ($20 per h

Activity based costing means where the product is valued on the basis of actual direct material ,…

Answered: the activity rates for the activity…

Business

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the activity rates for the activity cost pools. b) Assign the total 2017 manufacturing overhead costs to the two products using activity based costing (ABC) and determine the overhead cost per unit.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 40E

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2. Austin 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. Few per unit cost data are given: Traditional Costing DM Royale $850 Majestic $570 DL ($20 per hour) MOH ($38 per DLH) $140 $248 $100 $190 In 2017, Austin manufactured 25,000 units of the Royale and 10,000 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 total direct labor hours (200,000) for the two models. Management is considering phasing out the Royale model (comparatively low profit) and increasing the production of the Majestic model Before finalizing its decision, management asks Austin'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. Est. Overhead Activity | Level 40,000 18,000…
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