Brown Company has identified the following overhead activities, costs, and activity driv'ers for the coming year:

Assume for simplicity that each activity corresponds to a process. The following two jobs were completed during the year:

The company's normal activity is 4,000 direct labor hours.
Required:
1. Determine the unit cost for each job using direct labor hours to apply overhead.
2. Determine the unit cost for each job using the four activity drivers.
3. Which method produces the more accurate cost assignment? Why?

Transcribed Image Text:

Activity Setting up equipment Ordering costs Machine costs Receiving Budbal Order Expected Cost Activity Driver Activity Capacity $120,000 Number of setups 300 90,000 Number of orders 4,500 180,000 Machine hours 18,000 50,000 Number of parts 50,000