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	$547,170	Number of setups	690
Ordering costs	322,200	Number of orders	17,900
Machine costs	743,400	Machine hours	41,300
Receiving	297,500	Receiving hours	8,500

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

	Model A	Model B
Direct materials	$637,000	$756,000
Direct labor	$486,000	$460,000
Units completed	15,100	7,100
Direct labor hours	5,400	1,500
Number of setups	440	250
Number of orders	5,100	12,800
Machine hours	23,500	17,800
Receiving hours	2,400	6,100

The company's normal activity is 6,900 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	$________
Model B	$________

3. Which method produces the more accurate cost assignment?

Direct labor hours/Four activity drivers