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	$468,460	Number of setups	590
Ordering costs	333,000	Number of orders	18,500
Machine costs	908,600	Machine hours	41,300
Receiving	336,000	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	$577,000	$835,000
Direct labor	$479,000	$480,000
Units completed	15,600	8,800
Direct labor hours	5,200	2,400
Number of setups	350	240
Number of orders	6,100	12,400
Machine hours	23,200	18,100
Receiving hours	3,600	6,000

1. Determine the unit cost for each model using direct labor hours to apply averhead. 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?