Multiple Versus Single Overhead Rates, Activity Drivers

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	$526,680	Number of setups	660
Ordering costs	334,800	Number of orders	18,600
Machine costs	977,500	Machine hours	42,500
Receiving	464,100	Receiving hours	11,900

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

	Model A	Model B
Direct materials	$618,000	$754,000
Direct labor	453,000	497,000
Units completed	15,200	7,000
Direct labor hours	5,200	1,900
Number of setups	440	220
Number of orders	5,900	12,700
Machine hours	24,000	18,500
Receiving hours	4,000	7,900

The company's normal activity is 7,100 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 driversFour activity drivers