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	$470,230	Number of setups	590
Ordering costs	357,000	Number of orders	17,000
Machine costs	820,800	Machine hours	43,200
Receiving	414,200	Receiving hours	10,900

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

	Model A	Model B
Direct materials	$582,000	$786,000
Direct labor	460,000	497,000
Units completed	16,200	8,500
Direct labor hours	7,000	1,800
Number of setups	430	160
Number of orders	6,000	11,000
Machine hours	24,900	18,300
Receiving hours	3,900	7,000

The company's normal activity is 8,800 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

Multiple Versus Single Overhead Rates, Activity Drivers Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Deoro produces two models of dishwashers with the following expected prime costs and activity demands