Question: Multiple Versus Single Overhead Rates, Activity Drivers, Changing AssumptionsDeoro Company has identified the following overhead activities, costs, and activity drivers for the coming year:Deoro produces
Multiple Versus Single Overhead Rates, Activity Drivers, Changing AssumptionsDeoro 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:Required:1.Create a spreadsheet (using Excel or other similar software tool) that contains the given data for Deoro Company (e.g., Activity, Expected Cost, Activity Driver, and Activity Capacity) and for its two dishwasher models (e.g., Direct materials, Direct labor, Units completed). Utilizing your spreadsheet (cell references, formulas, etc.), determine the unit cost for each model using direct labor hours to apply overhead. (Round answers to the nearest cent.)2.Select one pie chart that visualizes the unit cost of Model A and Model B (from Requirement 1).3.Utilizing the same spreadsheet (cell references, formulas, etc.), determine the unit cost for each model using the four activity drivers to apply overhead. (Round answers to the nearest cent.)4.Select one pie chart that visualizes the unit cost of Model A and Model B (from Requirement 3).5.For this requirement, assume that Deoro Companys total expected ordering cost doubles to $720,000 and total expected receiving cost triples to $1,200,000. Enter these two changes into your spreadsheet. After entering these expected overhead cost changes, examine your spreadsheets unit cost for the following:a.Each model (A and B), using direct labor hours to apply overhead (as in Requirement 1).b.Each model (A and B), using the four activity drivers to apply overhead (as in Requirement 3).In what direction and by what amount did unit cost for Model A change?6.Briefly explain one advantage and one disadvantage of using a spreadsheet to calculate the impact of these two cost changes (as compared to calculating their impact using only a calculator, etc.).
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
