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

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 imvestigation. you have data from last year.
Manufacturing overhead was $1,440,000 based on production
of 28,000 handheld consoles and 10,000 home consoles.
Direct labor and direct materials costs were as follows. Total
Handheld Home Direct labor $1,160,400 $439,600
$1,600,000 750,000 684,000 Materials 1,434,000
Management has determined that overhead costs are caused
by three cost drivers. These drivers and their costs for last