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	$499,590	Number of setups	610
Ordering costs	342,000	Number of orders	19,000
Machine costs	954,500	Machine hours	41,500
Receiving	344,400	Receiving hours	8,400

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

	Model A	Model B
Direct materials	$602,000	$772,000
Direct labor	489,000	495,000
Units completed	15,500	7,500
Direct labor hours	5,700	2,400
Number of setups	450	160
Number of orders	6,000	13,000
Machine hours	23,000	18,500
Receiving hours	2,100	6,300

The company's normal activity is 8,100 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?

Direct labor hoursFour activity drivers