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 $1,338,000 based on production of 310,000 handheld consoles and 100,000 home consoles Direct labor and direct materials costs were as follows Handheld Home Total Direct labor $ 1,284,500 $ 388,000 $ 1,672,500 Materials 720,000 711,000 1,431,000 Management has determined that overhead costs are caused by three cost drivers These drivers and their costs for last year are as follows Activity Level Cost Driver Costs Assigned Handheld Home Total Number of production runs $ 605,000 40 15 55 Quality tests performed 551,000 12 17 29 Shipping orders processed 182,000 100 40 140 Total overhead $ 1,338,000 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 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 (Round Total Cost per Unit to 2 decimal places ) Overhead Total Cost per Unit Handheld Home Required 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 (Do not round intermediate calculations Round Total cost per unit to 2 decimal places ) Overhead Total Cost per Unit Handheld Home

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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

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 $1,338,000 based on production of 310,000 handheld consoles and 100,000 home consoles. Direct labor and direct materials costs were as follows.

	Handheld		Home		Total
Direct labor	$	1,284,500	$	388,000	$	1,672,500
Materials		720,000		711,000		1,431,000

Management has determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year are as follows.

			Activity Level
Cost Driver	Costs Assigned		Handheld	Home	Total
Number of production runs	$	605,000	40	15	55
Quality tests performed		551,000	12	17	29
Shipping orders processed		182,000	100	40	140
Total overhead	$	1,338,000

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?

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? (Round "Total Cost per Unit" to 2 decimal places.)

	Overhead	Total Cost per Unit
Handheld
Home

Required 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? (Do not round intermediate calculations. Round "Total cost per unit" to 2 decimal places.)