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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 $1.234,000 based on production of 300,000 handheld consoles and 109,000 home consoles Direct labor and direct materials costs were as follows. Direct labor Materials Handheld $1,149,500 790,000 Home $393,000 Total $1,542,500 676,000 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. Cost Driver Number of production runs Quality tests performed Shipping orders processed Total overhead Costs Assigned $ 450,000 600,000 176,000 $1,234,000 Activity Level Handheld 40 12 110 Home < Prev 5 2 of 20 50 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 Total 45 32 160. Next >

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 $1.234,000 based on production of 300,000 handheld consoles and 109,000 home consoles Direct labor and direct materials costs were as follows. Direct labor Materials Handheld $1,149,500 790,000 Home $393,000 Total $1,542,500 676,000 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. Cost Driver Number of production runs Quality tests performed Shipping orders processed Total overhead Costs Assigned $ 450,000 600,000 176,000 $1,234,000 Activity Level Handheld 40 12 110 Home < Prev 5 2 of 20 50 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 Total 45 32 160. Next >

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 34P: Kimball Company has developed the following cost formulas:...
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Cost Driver Number of production runs Quality tests performed Shipping orders processed Total overhead Required A Handheld Home 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? Complete this question by entering your answers in the tabs below. 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 B Overhead Show Transcribed Text Cost Driver Number of production runs Quality tests performed Shipping orders processed Total overhead Costs Assigned $ 450,000 608,000 176,000 $1,234,000 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.) Required A Activity Level Handheld Home Handheld Home Total Cost per Unit 40 12 110. Required B 5 20 50 Costs Assigned $ 450,000 608,000 176,000 $1,234,000 Overhead Total 45 32 160 C Total Cost per Unit 40 12 110 Activity Level Handheld Home Required: a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? W cost per unit produced for each product? Complete this question by entering your answers in the tabs below. 5 20 b. How much overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the produced for each product? 50 Total 45 32 160 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.)
Transcribed Image Text:Cost Driver Number of production runs Quality tests performed Shipping orders processed Total overhead Required A Handheld Home 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? Complete this question by entering your answers in the tabs below. 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 B Overhead Show Transcribed Text Cost Driver Number of production runs Quality tests performed Shipping orders processed Total overhead Costs Assigned $ 450,000 608,000 176,000 $1,234,000 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.) Required A Activity Level Handheld Home Handheld Home Total Cost per Unit 40 12 110. Required B 5 20 50 Costs Assigned $ 450,000 608,000 176,000 $1,234,000 Overhead Total 45 32 160 C Total Cost per Unit 40 12 110 Activity Level Handheld Home Required: a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? W cost per unit produced for each product? Complete this question by entering your answers in the tabs below. 5 20 b. How much overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the produced for each product? 50 Total 45 32 160 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.)
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 $1,234,000 based on production of 300,000 handheld consoles and 109,000 home consoles. Direct labor and direct materials costs were as follows. Direct labor Materials Handheld $1,149,500 790,000 Home $393,000 676,000 Cost Driver Number of production runs Quality tests performed Shipping orders processed Total overhead Management has determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year are as follows. Total $1,542,500 1,466,000 Costs Assigned $ 450,000 608,000 176,000 $1,234,000 Activity Level Handheld 40 12 110 Home 5 ( 20 50 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 < Prev 2 of 6 Total 45 32 160. Next >
Transcribed Image Text: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 $1,234,000 based on production of 300,000 handheld consoles and 109,000 home consoles. Direct labor and direct materials costs were as follows. Direct labor Materials Handheld $1,149,500 790,000 Home $393,000 676,000 Cost Driver Number of production runs Quality tests performed Shipping orders processed Total overhead Management has determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year are as follows. Total $1,542,500 1,466,000 Costs Assigned $ 450,000 608,000 176,000 $1,234,000 Activity Level Handheld 40 12 110 Home 5 ( 20 50 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 < Prev 2 of 6 Total 45 32 160. Next >
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