Question
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 Setting up equipment $494,100 Number of setups 610 Ordering costs 457,700 Number of orders 19,900 Machine costs 792,300 Machine hours 41,700 Receiving 483,000 Receiving hours 11,500 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $591,000 $762,000 Direct labor 474,000 486,000 Units completed 16,500 7,400 Direct labor hours 5,500 2,200 Number of setups 370 240 Number of orders 6,900 13,000 Machine hours 23,000 18,700 Receiving hours 3,600 7,900 The company's normal activity is 7,700 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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