Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Deoro produces two models of

Excerpt
Receiving 400,000 10,000 Transcribed Image Text: Model A Model B Direct materials $600,000 $480,000 16,000 6,000 $800,000 $480,000 8,000 2,000 200 Direct labor Units completed Direct labor hours Number of setups 400 Number of orders Macne hours 6,000 24,000 12,000 18,000 7,000 Receiving hours 3,000

Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Deoro produces two models of dishwashers with the following expected prime costs and activity demands: The company’s normal activity is 8,000 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. Wch method produces the more accurate cost assignment? Why? Transcribed Image Text: Activity
Expected Cost
Activity Driver
Activity Capacity
Setting up equipment
Ordering costs
Macne costs
Number of setups
Number of orders
Macne hours
Receiving hours
S480,000
600
360,000
840,000
18,000
42,000
Receiving
400,000
10,000 Transcribed Image Text: Model A
Model B
Direct materials
$600,000
$480,000
16,000
6,000
$800,000
$480,000
8,000
2,000
200
Direct labor
Units completed
Direct labor hours
Number of setups
400
Number of orders
Macne hours
6,000
24,000
12,000
18,000
7,000
Receiving hours
3,000

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