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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	$433,010	Number of setups	530
Ordering costs	282,200	Number of orders	16,600
Machine costs	715,700	Machine hours	42,100
Receiving	442,800	Receiving hours	10,800

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

	Model A	Model B
Direct materials	$639,000	$785,000
Direct labor	486,000	467,000
Units completed	17,000	7,100
Direct labor hours	5,300	2,500
Number of setups	370	160
Number of orders	5,400	11,200
Machine hours	24,000	18,100
Receiving hours	3,900	6,900

The company's normal activity is 7,800 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