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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 $478,490 Number of setups 590 Ordering costs 358,600 Number of orders 16,300 Machine costs 848,000 Machine hours 42,400 Receiving 416,000 Receiving hours 10,400 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $616,000 $770,000 Direct labor 489,000 487,000 Units completed 16,000 7,100 Direct labor hours 5,200 2,100 Number of setups 430 160 Number of orders 5,200 11,100 Machine hours 24,200 18,200 Receiving hours 3,800 6,600 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. 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? Direct labor hours Four activity drivers

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 $478,490 Number of setups 590 Ordering costs 358,600 Number of orders 16,300 Machine costs 848,000 Machine hours 42,400 Receiving 416,000 Receiving hours 10,400 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $616,000 $770,000 Direct labor 489,000 487,000 Units completed 16,000 7,100 Direct labor hours 5,200 2,100 Number of setups 430 160 Number of orders 5,200 11,100 Machine hours 24,200 18,200 Receiving hours 3,800 6,600 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. 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? Direct labor hours Four activity drivers

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 $478,490 Number of setups 590 Ordering costs 358,600 Number of orders 16,300 Machine costs 848,000 Machine hours 42,400 Receiving 416,000 Receiving hours 10,400 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $616,000 $770,000 Direct labor 489,000 487,000 Units completed 16,000 7,100 Direct labor hours 5,200 2,100 Number of setups 430 160 Number of orders 5,200 11,100 Machine hours 24,200 18,200 Receiving hours 3,800 6,600 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. 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? Direct labor hours Four activity drivers
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 $478,490 Number of setups 590 Ordering costs 358,600 Number of orders 16,300 Machine costs 848,000 Machine hours 42,400 Receiving 416,000 Receiving hours 10,400 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $616,000 $770,000 Direct labor 489,000 487,000 Units completed 16,000 7,100 Direct labor hours 5,200 2,100 Number of setups 430 160 Number of orders 5,200 11,100 Machine hours 24,200 18,200 Receiving hours 3,800 6,600 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. 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? Direct labor hours Four activity drivers
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