Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year:

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

The company€™s normal activity is 8,000 direct labor hours.
Required:
1. Determine the unit cost for each model using direct labor hours to apply overhead.
2. Determine the unit cost for each model using the four activity drivers.
3. Which method produces the more accurate cost assignment? Why?

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Activity Expected Cost Activity Driver Activity Capacity Setting up equipment Ordering costs Machine costs Receiving S480,000 360,000 840,000 400,000 Reciing hours Number of setups Number of orders Machine hours 600 18,000 42,000 10,000 Model A Model B Direct materials Direct labor Units completed Direct labor hours Number of setups Number of orders Machine hours Receiving hours $%600,000 $480,000 16,000 6,000 400 6,000 24,000 3,000 S800,000 S480,000 8,000 2,000 200 12,000 18,000 7,000