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	$559,590	Number of setups	690
Ordering costs	357,200	Number of orders	18,800
Machine costs	826,000	Machine hours	41,300
Receiving	373,800	Receiving hours	8,900

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

	Model A	Model B
Direct materials	$571,000	$833,000
Direct labor	$465,000	$492,000
Units completed	15,500	8,800
Direct labor hours	6,200	2,300
Number of setups	450	240
Number of orders	6,300	12,500
Machine hours	23,500	17,800
Receiving hours	2,600	6,300

The company's normal activity is 8,500 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?