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	$488,560	Number of setups	620
Ordering costs	400,200	Number of orders	17,400
Machine costs	888,800	Machine hours	40,400
Receiving	350,000	Receiving hours	10,000

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

	Model A	Model B
Direct materials	$613,000	$842,000
Direct labor	477,000	491,000
Units completed	16,500	9,000
Direct labor hours	6,700	1,500
Number of setups	440	180
Number of orders	5,000	12,400
Machine hours	23,400	17,000
Receiving hours	2,300	7,700

The company's normal activity is 8,200 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 CostModel A$fill in the blank 3Model B$fill in the blank 4

3. Which method produces the more accurate cost assignment?