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 $476,130 number of setups 590 ordering costs 376,200 number of orders 17,100 machine costs 756,000 machine hours 42,000 receiving 402,500 receiving hours 11,500 deoro produces two models of dishwashers with the following expected prime costs and activity demands:
Model A Model B
Direct materials $577,000 $760,000
Direct labor $461,000 $459,000
Units completed 16,600 7,200
Direct labor hours 5,100 2,300
Number of setups 400 210
Number of orders 6,100 11,000
Machine hours 23,100 19,000
Receiving hours 3,300 6,300
The company's normal activity is 7,400 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 $
Model B $
2. Determine the unit cost for each model using the four activity drivers. Round your answers to nearest cent.
Unit Cost :
Model A $
Model B $
3. Which method produces the more accurate cost assignment?
Answers: 3
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Deoro company has identified the following overhead activities, costs, and activity drivers for the...
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