Exercise 9.43 (Algo) Activity-Based versus Traditional Costing (LO 9-4,5,6) Maglie Company manufactures two video game consoles: handheld and home. The handheld consoles are smaller and less expensive than the home consoles. The company only recently began producing the home model . Since the introduction of the new product, profits have been steadily declining Management believes that the accounting system is not accurately allocating costs to products, particularly because sales of the new product have been increasing Management has asked you to investigate the cost allocation problem. You find that manufacturing overhead is currently assigned to products based on their direct labor costs. For your investigation, you have data from last year. Manufacturing overhead was $1.547.000 based on production of 310,000 handheld consoles and 88,000 home consoles. Direct labor and direct materials costs were as follows. Direct labor Materials Handheld $1,541,750 720,000 Home $392,000 692,000 Total $1,933, 750 1,412,000 Management has determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year are as follows Cost Driver Number of production runs Quality tests performed Shipping orders processed Total overhead Costs Assigned 5 715,000 608,000 224,000 $1.547.000 Activity Lovel Handheld Home 50 15 12 20 110 50 Total 65 32 160 Required: a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? b. How much overhead will be assigned to each product if direct lobor cost is used to allocate overhead? What is the total cost per unit produced for each product? Cost Driver Number of production runs Quality tests performed Shipping orders processed Total overhead Costs Assigned $ 715,000 608,000 224,000 $1,547,000 Handbold 50 12 110 Home 15 20 SO Total 65 32 160 Required: a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? b. How much overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost per unit produced for each product? Complete this question by entering your answers in the tabs below. Required A Required B How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? (Round "Total Cost per Unit" to 2 decimal places.) Total Cost per Overhead Handheld Home Unit Required A Required B > Cost Driver Number of production runs Quality tests performed Shipping orders processed Total overhead Costs Assigned $ 715,000 608,000 224,000 $1,547,000 Handheld 50 12 110 Homo 15 20 50 Total 65 32 160 Required: 3. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? b. How much overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost per un produced for each product? Complete this question by entering your answers in the tabs below. Required A Required EL How much overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost per unit produced for each product? (Do not round Intermediate calculations. Round "Total cost per unit" to 2 decimal places.) Overhead Total Cost per Unit Handheld Home