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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

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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 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 $1,520,000 based on production of 330,000 handheld consoles and 84,000 home consoles Direct labor and direct materials costs were as follows: Handheld Total Direct labor $1,521,000 $ 379,000 $1,900,000 Materials 720,000 696,000 1,416,000 Home 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 $ 780,000 45 Quality tests performed 600,000 12 18 Shipping orders processed 140,000 100 40 Total overhead $1,520,000 15 60 30 140 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 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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