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Direct labor hours Number of setups Number of orders Machine hours Receiving hours 3,700 The company's normal activity is 8,700 direct labor hours. Required: L. Determine the unit cost for each model using direct labor hours to apply overhead. Round intermediate calculations and final answers to nearest cent. Model A Model B Unit Cost Model A 6,400 Unit Cost 440 5,500 23,900 2,300 180 12,200 18,000 2. Determine the unit cost for each model using the four activity drivers. Round your answers to nearest cent. 6,700

Direct labor hours Number of setups Number of orders Machine hours Receiving hours 3,700 The company's normal activity is 8,700 direct labor hours. Required: L. Determine the unit cost for each model using direct labor hours to apply overhead. Round intermediate calculations and final answers to nearest cent. Model A Model B Unit Cost Model A 6,400 Unit Cost 440 5,500 23,900 2,300 180 12,200 18,000 2. Determine the unit cost for each model using the four activity drivers. Round your answers to nearest cent. 6,700

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 Number of setups 620 Ordering costs Number of orders 17,700 Machine costs Machine hours 41,900 Receiving Receiving hours 10,400 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Direct materials Direct labor Units completed Direct labor hours Number of setups Number of orders Machine hours Receiving hours Model A Model B $502,200 371,700 963,700 468,000 Model A Model A Model B $553,000 463,000 15,900 Unit Cost 6,400 440 Unit Cost 5,500 23,900 Model B 3,700 The company's normal activity is 8,700 direct labor hours. $833,000 499,000 8,800 2,300 180 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. 12,200 18,000 6,700 2. Determine the unit cost for each model using the four activity drivers. Round your answers to nearest cent. 3. Which method produces the more accurate cost assignment?
Transcribed Image Text: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 Number of setups 620 Ordering costs Number of orders 17,700 Machine costs Machine hours 41,900 Receiving Receiving hours 10,400 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Direct materials Direct labor Units completed Direct labor hours Number of setups Number of orders Machine hours Receiving hours Model A Model B $502,200 371,700 963,700 468,000 Model A Model A Model B $553,000 463,000 15,900 Unit Cost 6,400 440 Unit Cost 5,500 23,900 Model B 3,700 The company's normal activity is 8,700 direct labor hours. $833,000 499,000 8,800 2,300 180 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. 12,200 18,000 6,700 2. Determine the unit cost for each model using the four activity drivers. Round your answers to nearest cent. 3. Which method produces the more accurate cost assignment?
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