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	$532,350	Number of setups	650
Ordering costs	330,600	Number of orders	17,400
Machine costs	913,000	Machine hours	41,500
Receiving	364,800	Receiving hours	9,600

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

	Model A	Model B
Direct materials	$612,000	$828,000
Direct labor	$482,000	$499,000
Units completed	16,600	8,500
Direct labor hours	6,400	2,300
Number of setups	410	240
Number of orders	5,800	11,600
Machine hours	23,300	18,200
Receiving hours	3,500	6,100

The company's normal activity is 8,700 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?