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	$440,720	Number of setups	560
Ordering costs	363,300	Number of orders	17,300
Machine costs	820,000	Machine hours	41,000
Receiving	381,300	Receiving hours	9,300

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

	Model A	Model B
Direct materials	$634,000	$802,000
Direct labor	$485,000	$496,000
Units completed	16,500	7,800
Direct labor hours	5,300	2,100
Number of setups	360	200
Number of orders	5,700	11,600
Machine hours	23,100	17,900
Receiving hours	2,500	6,800

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	$
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?