Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 $467,870 Number of setups 590
Ordering costs 342,000 Number of orders 18,000
Machine costs 954,500 Machine hours 41,500
Receiving 354,900 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 $647,000 $805,000
Direct labor 465,000 472,000
Units completed 16,500 8,200
Direct labor hours 5,700 2,500
Number of setups 350 240
Number of orders 6,400 11,600
Machine hours 23,600 17,900
Receiving hours 2,800 6,300

The company's normal activity is 8,200 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?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Crime Investigation And Control

Authors: K. H. Spencer Pickett, Jennifer M. Pickett

1st Edition

0471203351, 9780471203353

More Books

Students also viewed these Accounting questions

Question

Discus 3D Graphics.

Answered: 1 week ago

Question

how do you sign a draft (negotiable instrument)?

Answered: 1 week ago