LO3, LO4 Plata Company has identified the following overhead activitics, costs, and activity dri- vers for the coming year: Activity Expected Cost Activity Driver Activity Capacity 300 Setting up equipment $120,000 Number of setups 90,000 210,000 100,000 Number of orders Ordering costs Machine costs Receiving 9,000 21,000 5,000 Machine hours Receiving hours Plata produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $150,000 $200,000 S120,000 Direct labor $120,000 Units completed Direct labor hours 8,000 4,000 3,000 1,000 100 6,000 9,000 3,500 Number of setups 200 Number of orders 3,000 12,000 1,500 Machine hours Receiving hours The company's normal activity is 4,000 direct labor hours. Chapter 4 Activity-Based Costing Required: 1. Determine the unit cost for cach model using direct labor hours to apply over- head. 2. Determine the unit cost for each model using the four activity drivers. 3. Which method produces the more accurate cost assignment? Why?