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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
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 $459,940 Number of setups 580 Ordering costs 350,000 Number of orders 17,500 Machine costs 828,000 Machine hours 41,400 Receiving 366,600 Receiving hours 9,400 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $590,000 $806,000 Direct labor $487,000 $473,000 Units completed 16,000 7,400 Direct labor hours 1,500 Number of setups 360 Number of orders 6,200 11,300 Machine hours 23,100 18,300 Receiving hours 3,400 6,000 6,400 220 The company's normal activity is 7,900 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 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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