glie Company manufactures two video game consoles: handheld and home. held 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 accu- rately allocating costs to products, particularly because sales of the new product have been lctivity-Based versus Traditional Costing Management has asked you to investigate the cost allocation problem. You find that man- ufacturing overhead is currently assigned to products based on their direct labor costs. For your investigation, you have data from last year. Manufacturing overhead was $1,440,000 increasing based on direct materials costs were as follows: production of 28,000 handheld consoles and 10.000 home consoles. Direct labor and Home Total Handheld Direct labor. Materials . 750,000 684,000 1,434,000 Management has determined that overhead costs are caused by three cost drivers. These driv- ers and their costs for last year are as follows: Activity Level Cost Driver Costs Assigned Handheld Home Total Number of production runs Quality tests performed . Shipping orders processed S 660,000 594,000 186,000 $1,440,000 40 12 100 10 18 50 50 30 150 Total overhead.. _ _ _ . _ Required 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? How much overhead will be assigned to each product if direct labor cost is used to allo cate overhead? What is the total cost per unit produced for each product? How might the results from using activity-based costing in requirement (a) help manage ment understand Maglies declining profits