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	$454,720	Number of setups	560
Ordering costs	338,200	Number of orders	17,800
Machine costs	921,800	Machine hours	41,900
Receiving	451,000	Receiving hours	11,000

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

	Model A	Model B
Direct materials	$607,000	$807,000
Direct labor	499,000	460,000
Units completed	16,100	7,000
Direct labor hours	5,200	2,500
Number of setups	360	200
Number of orders	5,400	12,400
Machine hours	24,700	17,200
Receiving hours	3,100	7,900

The company's normal activity is 7,700 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? Four activity drivers