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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 Cost	Activity Driver	Activity Capacity
Setting up equipment	$438,480	Number of setups	560
Ordering costs	309,400	Number of orders	18,200
Machine costs	757,800	Machine hours	42,100
Receiving	374,400	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	$587,000	$781,000
Direct labor	479,000	474,000
Units completed	15,500	7,600
Direct labor hours	5,300	1,600
Number of setups	390	170
Number of orders	5,600	12,600
Machine hours	23,600	18,500
Receiving hours	3,300	6,300

The company's normal activity is 6,900 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	$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