Question: 1 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 $480,000 Number of 600 equipment setups Ordering costs 360,000 Number of 18,000 orders Machine costs 840,000 Machine hours 42,000 Receiving 400,000 Receiving 10,000 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $600,000 $800,000 Direct labor $480,000 $480,000 Units completed 16,000 $8,000 Direct labor hours 6,000 2,000 Number of setups 400 200 Number of orders 6,000 12,000 Machine hours 24,000 18,000 Receiving hours 3,000 7,000 The company's normal activity is 8,000 direct labor hours. Determine the unit cost for each model using direct labor hours to apply overhead.
Question: 1 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 $480,000 Number of 600 equipment setups Ordering costs 360,000 Number of 18,000 orders Machine costs 840,000 Machine hours 42,000 Receiving 400,000 Receiving 10,000 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $600,000 $800,000 Direct labor $480,000 $480,000 Units completed 16,000 $8,000 Direct labor hours 6,000 2,000 Number of setups 400 200 Number of orders 6,000 12,000 Machine hours 24,000 18,000 Receiving hours 3,000 7,000 The company's normal activity is 8,000 direct labor hours. Determine the unit cost for each model using direct labor hours to apply overhead.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question: 1
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 $480,000
Number
of 600
equipment
setups
Ordering costs
360,000
Number
of 18,000
orders
Machine costs
840,000
Machine hours
42,000
Receiving
400,000
Receiving
10,000
Deoro produces two models of dishwashers with the following expected
prime costs and activity demands:
Model A Model B
Direct materials
$600,000 $800,000
Direct labor
$480,000 $480,000
Units completed
16,000
$8,000
Direct labor hours 6,000
2,000
Number of setups 400
200
Number of orders 6,000
12,000
Machine hours
24,000
18,000
Receiving hours
3,000
7,000
The company's normal activity is 8,000 direct labor hours.
Determine the unit cost for each model using direct labor hours to apply
overhead.
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