izi Saved 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 $1,337,000 based on production of 310,000 handheld consoles and 95,000 home consoles. Direct labor and direct materials costs were as follows. 39 Direct labor Materials Handheld $1,262,250 780,000 Hone $409,000 696,000 Total $1,671,250 1,476,000 Mc 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 $660,000 527,000 150,000 $1,337,000 Activity Level Handheld Total 45 10 55 13 10 31 100 50 150 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?