Maglie Company manufactures two video game consoles: handheld and home. The handheld consoles are smaller and less expen

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Maglie Company Manufactures Two Video Game Consoles Handheld And Home The Handheld Consoles Are Smaller And Less Expen 1 (497.09 KiB) Viewed 13 times

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 $1,218,000 based on production of 290,000 handheld consoles and 86,000 home consoles. Direct labor and direct materials costs were as follows. Direct labor Materials Handheld $1,142,500 790,000 Home $380,000 676,000 Cost Driver Number of production runs Quality tests performed Shipping orders processed Total overhead Total $1,522,500 1,466,000 Management has determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year are as follows. Costs Assigned $ 540,000 496,000 182,000 $1,218,000 Activity Level Handheld 35 14 90 Home 10 17 50 Total 45 31 140
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? 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 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.) Handheld Home Overhead Total Cost per Unit
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? Complete this question by entering your answers in the tabs below. Required A 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.) Handheld Home Overhead Total Cost per Unit