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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
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 $430,890 Number of setups Setting up equipment 530 Ordering costs 330,600 Number of orders 17,400 Machine costs 890,400 Machine hours 42,400 Receiving 8,700 348,000 Receiving hours Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $582,000 $771,000 Direct labor 457,000 488,000 Units completed 16,500 7,000 Direct labor hours 5,800 1,800 Number of setups 350 180. Number of orders 5,400 12,000 Machine hours 24,600 17,800 Receiving hours 2,600 6,100 The company's normal activity is 7,600 direct labor hours. 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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