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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	$467,870	Number of setups	590
Ordering costs	342,000	Number of orders	18,000
Machine costs	954,500	Machine hours	41,500
Receiving	354,900	Receiving hours	9,100

Deoro produces two models of dishwashers with the following expected prime costs and activity demands:

	Model A	Model B
Direct materials	$647,000	$805,000
Direct labor	465,000	472,000
Units completed	16,500	8,200
Direct labor hours	5,700	2,500
Number of setups	350	240
Number of orders	6,400	11,600
Machine hours	23,600	17,900
Receiving hours	2,800	6,300

The company's normal activity is 8,200 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	$fill in the blank 1
Model B	$fill in the blank 2

2. Determine the unit cost for each model using the four activity drivers. Round your answers to nearest cent.

	Unit Cost
Model A	$fill in the blank 3
Model B	$fill in the blank 4

3. Which method produces the more accurate cost assignment?

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