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	$517,760	Number of setups	640
Ordering costs	384,300	Number of orders	18,300
Machine costs	717,400	Machine hours	42,200
Receiving	391,300	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	$638,000	$845,000
Direct labor	$475,000	$450,000
Units completed	16,200	7,500
Direct labor hours	6,700	2,400
Number of setups	420	220
Number of orders	6,300	12,000
Machine hours	23,400	18,800
Receiving hours	2,000	7,100

The company's normal activity is 9,100 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	$
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? Four activity drivers