Asbury Coffee Enterprises $($ACE$)$ manufactures two models of coffee grinders: Personal and Commerclal. The Personal grinders have a smaller capacity and are less durable than the Commercial grinders. ACE only recently began producing the Commercial model. SInce the Introduction of the new product, profits have been steadily decining, although sales have been increasing. The management at ACE belleves that the problem might be in how the accounting system allocates costs to products.

The current system at ACE allocates manufacturing overhead to products based on direct labor costs. For the most recent year, which Is representative, manufacturing overhead totaled $$2,091,000$ based on production of $30,000$ Personal grinders and $10,000$ Commerclal grinders. Direct costs were as follows:

$\backslash$table$[[$Direct materials,Personal,Commercial,Total$],[$Direct labor,$$1,448,200,$$$661,000,$$$2,109,200$