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?
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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 | $449,680 | Number of setups | 560 |
| Ordering costs | 343,900 | Number of orders | 18,100 |
| Machine costs | 915,600 | Machine hours | 43,600 |
| Receiving | 457,800 | Receiving hours | 10,900 |
Deoro produces two models of dishwashers with the following expected prime costs and activity demands:
| Model A | Model B | |
| Direct materials | $638,000 | $823,000 |
| Direct labor | $493,000 | $465,000 |
| Units completed | 15,600 | 8,700 |
| Direct labor hours | 6,000 | 2,300 |
| Number of setups | 350 | 210 |
| Number of orders | 6,100 | 12,000 |
| Machine hours | 24,700 | 18,900 |
| Receiving hours | 3,700 | 7,200 |
The company's normal activity is 8,300 direct labor hours.
Transcribed Image Text: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?
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