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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 $468,640 Number of setups 580 Ordering costs 407,100 Number of orders 17,700 Machine costs 842,000 Machine hours 42,100 Receiving 414,400 Receiving hours 11,200 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $609,000 $829,000 Direct labor 452,000 458,000 Units completed 17,000 9,000 Direct labor hours 6,400 2,500 Number of setups 430 150 Number of orders 6,200 11,500 Machine hours 24,200 17,900 Receiving hours 3,600 7,600 The company's normal activity is 8,900 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 Model B 2. Determine the unit cost for each model using the four activity drivers. Round your answers to nearest cont. Unit Cost Model A Model B 3. Which method produces the more accurate cost assignment? Direct labor hours Four activity drivers Previous NO
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