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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 up

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 $520,650 Number of setups 650
Ordering costs 333,000 Number of orders 18,500
Machine costs 708,900 Machine hours 41,700
Receiving 401,700 Receiving hours 10,300

Deoro produces two models of dishwashers with the following expected prime costs and activity demands:

Model A Model B
Direct materials $573,000 $840,000
Direct labor 485,000 451,000
Units completed 15,100 8,400
Direct labor hours 5,400 2,000
Number of setups 430 220
Number of orders 6,100 12,400
Machine hours 24,000 17,700
Receiving hours 3,100 7,200

The company's normal activity is 7,400 direct labor hours.

Required:

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 $fill in the blank 1
Model B $fill in the blank 2

2. Determine the unit cost for each model using the four activity drivers. Round your answers to nearest cent.

Unit Cost
Model A $fill in the blank 3
Model B $fill in the blank 4

3. Which method produces the more accurate cost assignment?

Direct labor hoursFour activity drivers

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