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Maglie Company manufactures two video game consoles: handheld and home. The handheld consoles are smaller and less expensive then the home consoles. The company only
Maglie Company manufactures two video game consoles: handheld and home. The handheld consoles are smaller and less expensive then the home consoles. The company only recently begon producing the home model. Since the introduction of the new product, profits have been steadily declining. Mensgement believes that the sccounting 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 $1.622.000 based on production of 300.000 handheld consoles and 103.000 home consoles. Direct Isbor and direct materials costs were as follows. Direct labor Materials Handheld $1,634,500 780,202 Home $293.000 690,000 Total $2,227,50 1,470,000 Management has determined thet overhead costs are caused by three cost drivers. These drivers and their costs for last year are es follows. Cost Driver Number of production runs Quality tests performed Shipping orders processed Total overhead Costs Assigned $ 770,000 600,000 252,eae $1,622.000 Activity Level Handheld Horte 45 10 11 19 12e be Total 55 32 18e Required: a. How much overheed 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 ir direct labor cost is used 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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