Multiple Versus Single Overhead Rates, Activity Drivers

Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year:

ActivityExpected CostActivity DriverActivity CapacitySetting up equipment$540,270Number of setups690Ordering costs380,100Number of orders18,100Machine costs717,400Machine hours42,200Receiving402,800Receiving hours10,600

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

Model AModel BDirect materials$597,000$785,000Direct labor477,000471,000Units completed17,0007,500Direct labor hours6,0002,400Number of setups440250Number of orders5,30012,800Machine hours24,50017,700Receiving hours3,2007,400

The company's normal activity is 8,400 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 CostModel A$fill in the blank Model B$fill in the blank

2. Determine the unit cost for each model using the four activity drivers. Round your answers to nearest cent.

Unit CostModel A$fill in the blank Model B$fill in the blank

3. Which method produces the more accurate cost assignment?

Direct labor hours

Four activity drivers