Reference no: EM133142963

Question - 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	$438,480	Number of setups	560
Ordering costs	418,000	Number of orders	19,000
Machine costs	822,000	Machine hours	41,100
Receiving	396,000	Receiving hours	9,900

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

	Model A	Model B
Direct materials	$586,000	$785,000
Direct labor	462,000	478,000
Units completed	15,800	7,300
Direct labor hours	5,100	2,200
Number of setups	380	180
Number of orders	7,000	12,000
Machine hours	23,000	18,100
Receiving hours	3,600	6,300

The company's normal activity is 7,300 direct labor hours.

Required -

1. Determine the unit cost for each model using direct labor hours to apply overhead.

2. Determine the unit cost for each model using the four activity drivers.

3. Which method produces the more accurate cost assignment?