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	$487,390	Number of setups	610
Ordering costs	373,800	Number of orders	17,800
Machine costs	780,900	Machine hours	41,100
Receiving	468,000	Receiving hours	11,700

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

	Model A	Model B
Direct materials	$588,000	$761,000
Direct labor	468,000	492,000
Units completed	15,500	7,000
Direct labor hours	5,400	2,200
Number of setups	410	200
Number of orders	5,200	12,600
Machine hours	24,100	17,000
Receiving hours	3,900	7,800

The company's normal activity is 7,600 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