Maglie Company manufactures two video game consoles handheld and hom.docx

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  • kevenilbery
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Maglie Company manufactures two video game consoles:handheld and home. The handheld consoles are smaller andless expensive than the home consoles. The company onlyrecently began producing the home model. Since theintroduction of the new product, profits have been steadilydeclining. Management believes that the accounting system isnot accurately allocating costs to products, particularlybecause sales of the new product have been increasingManagement has asked you to investigate the cost allocationproblem. You find that manufacturing overhead is currentlyassigned to products based on their direct labor costs. Foryour imvestigation. you have data from last year.Manufacturing overhead was $1,440,000 based on productionof 28,000 handheld consoles and 10,000 home consoles.Direct labor and direct materials costs were as follows. TotalHandheld Home Direct labor $1,160,400 $439,600$1,600,000 750,000 684,000 Materials 1,434,000Management has determined that overhead costs are causedby three cost drivers. These drivers and their costs for last

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Term
Spring
Professor
REBECCATOLEDO
Tags
Video game console, Maglie Company

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