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	$426,400	Number of setups	520
Ordering costs	353,400	Number of orders	18,600
Machine costs	919,600	Machine hours	41,800
Receiving	382,800	Receiving hours	8,700

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

	Model A	Model B
Direct materials	$601,000	$770,000
Direct labor	$460,000	$454,000
Units completed	15,000	7,600
Direct labor hours	6,600	2,200
Number of setups	350	170
Number of orders	6,600	12,000
Machine hours	24,000	17,800
Receiving hours	2,200	6,500

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
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?