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Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Expected Cost Activity Driver Activity Capacity Setting
Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Expected Cost Activity Driver Activity Capacity Setting up equipment $456,960 Number of setups 560 Ordering costs 368,000 Number of orders 18,400 Machine costs 943,800 Machine hours 42,900 Receiving 404,000 Receiving hours 10,100 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $550,000 $787,000 Direct labor 469,000 499,000 Units completed 16,400 7,400 Direct labor hours 5,500 2,200 Number of setups 400 160 Number of orders 5,700 12,700 Machine hours 24,900 18,000 Receiving hours 3,100 7,000 The company's normal activity is 7,700 direct labor hours. 1. Determine the unit cost for each model using direct labor hours to apply overhead. Round intermediate calculations and final answers to nearest cent. Unit Cost Model A Model B 2. Determine the unit cost for each model using the four activity drivers. Round your answers to nearest cent. Unit Cost Model A Model B 3. Which method produces the more accurate cost assignment?
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