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	$440,160	Number of setups	560
Ordering costs	359,100	Number of orders	18,900
Machine costs	968,300	Machine hours	42,100
Receiving	412,000	Receiving hours	10,300

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

	Model A	Model B
Direct materials	$620,000	$758,000
Direct labor	$490,000	$486,000
Units completed	16,100	8,300
Direct labor hours	5,500	2,400
Number of setups	390	170
Number of orders	7,000	11,900
Machine hours	23,700	18,400
Receiving hours	2,800	7,500

The company's normal activity is 7,900 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?