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 $481,440 Number of setups 590 Ordering costs 400,400 Number of orders 18,200 Machine costs 890,400 Machine hours 42,400 Receiving 468,000 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 $590,000 $845,000 Direct labor $495,000 $474,000 Units completed 16,600 8,100 Direct labor hours 5,400 1,600 Number of setups 440 150 Number of orders 5,300 12,900 Machine hours 24,800 17,600 Receiving hours 3,100 7,300 The company's normal activity is 7,000 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?
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 $481,440 Number of setups 590 Ordering costs 400,400 Number of orders 18,200 Machine costs 890,400 Machine hours 42,400 Receiving 468,000 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 $590,000 $845,000 Direct labor $495,000 $474,000 Units completed 16,600 8,100 Direct labor hours 5,400 1,600 Number of setups 440 150 Number of orders 5,300 12,900 Machine hours 24,800 17,600 Receiving hours 3,100 7,300 The company's normal activity is 7,000 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?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 27E: Plata Company has identified the following overhead activities, costs, and activity drivers for the...
Related questions
Question
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 | $481,440 | Number of setups | 590 |
| Ordering costs | 400,400 | Number of orders | 18,200 |
| Machine costs | 890,400 | Machine hours | 42,400 |
| Receiving | 468,000 | 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 | $590,000 | $845,000 |
| Direct labor | $495,000 | $474,000 |
| Units completed | 16,600 | 8,100 |
| Direct labor hours | 5,400 | 1,600 |
| Number of setups | 440 | 150 |
| Number of orders | 5,300 | 12,900 |
| Machine hours | 24,800 | 17,600 |
| Receiving hours | 3,100 | 7,300 |
The company's normal activity is 7,000 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?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,