Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year:Deoro produces two models of dishwashers with the following expected prime costs and activity demands:The company’s normal activity is 8,000 direct labor hours.Required:1. Determine the unit cost for each model using direct labor hours to applyoverhead.2. Determine the unit cost for each model using the four activity drivers.3. Which method produces the more accurate cost assignment? Why? ActivityExpected CostActivity DriverActivity CapacitySetting up equipmentOrdering costsMachine costsNumber of setupsNumber of ordersMachine hoursReceiving hoursS480,000600360,000840,00018,00042,000Receiving400,00010,000 Model AModel BDirect materials$600,000$480,00016,0006,000$800,000$480,0008,0002,000200Direct laborUnits completedDirect labor hoursNumber of setups400Number of ordersMachine hours6,00024,00012,00018,0007,000Receiving hours3,000

Name: Deoro Company has identified the following overhead activities, costs,
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Description: Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year:Deoro produces two models of dishwashers with the following expected prime costs and activity demands:The company’s normal activity is 8,0

Overhead rate = Total expected costs / Total direct labor hours = ($480000 + 360000 + 840000 +…

Business

Accounting

Activity Expected Cost Activity Driver Activity Capacity Setting up equipment Ordering costs Machine costs Number of setups Number of orders Machine hours Receiving hours S480,000 600 360,000 840,000 18,000 42,000 Receiving 400,000 10,000 Model A Model B Direct materials $600,000 $480,000 16,000 6,000 $800,000 $480,000 8,000 2,000 200 Direct labor Units completed Direct labor hours Number of setups 400 Number of orders Machine hours 6,000 24,000 12,000 18,000 7,000 Receiving hours 3,000

Activity Expected Cost Activity Driver Activity Capacity Setting up equipment Ordering costs Machine costs Number of setups Number of orders Machine hours Receiving hours S480,000 600 360,000 840,000 18,000 42,000 Receiving 400,000 10,000 Model A Model B Direct materials $600,000 $480,000 16,000 6,000 $800,000 $480,000 8,000 2,000 200 Direct labor Units completed Direct labor hours Number of setups 400 Number of orders Machine hours 6,000 24,000 12,000 18,000 7,000 Receiving hours 3,000

Pkg Acc Infor Systems MS VISIO CD

10th Edition

ISBN:9781133935940

Author:Ulric J. Gelinas

Publisher:Ulric J. Gelinas

Chapter15: Integrated Production Processes (ipps)

Section: Chapter Questions

Problem 1SP

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