il-rachel.tate@eagle: × Exam 4 (Chapters 7 & 9) × m C O ezto.mheducation.com/hm.
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il-rachel.tate@eagle: × Exam 4 (Chapters 7 & 9) × m C O ezto.mheducation.com/hm.tpx 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, particularty 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 S1,347,000 based on production of 330,000 handheld consoles and 118,000 home consoles. Direct labor and direct materials costs were as follows Direct labor Materials S1.268.750 710,000 S 415.000 667,000 $1.683.750 1377,000 Management has determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year are as follows Level Cost Driver Number of production runs Quality tests performed Shipping orders processed Total overhead Costs AssignedHandheldHome Total S 550,000 589,000 208.000 51.347.000 45 14 100 50 60 160 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 Handhelo Home ) Type here to search eExplanation / Answer
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b.
Working:
Overhead $ Total Cost per Unit $ Handheld 891000 8.70 Home 456000 13.03Related Questions
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