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	$496,620	Number of setups	620
Ordering costs	298,800	Number of orders	16,600
Machine costs	832,200	Machine hours	43,800
Receiving	391,300	Receiving hours	9,100

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

	Model A	Model B
Direct materials	$634,000	$843,000
Direct labor	476,000	453,000
Units completed	16,100	8,500
Direct labor hours	6,900	2,100
Number of setups	430	190
Number of orders	5,600	11,000
Machine hours	24,800	19,000
Receiving hours	2,900	6,200

The company's normal activity is 9,000 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? Four activity drivers