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 $481,900 Number of setups 610 Ordering costs 457,700 Number of orders 19,900 Machine costs 702,100 Machine hours 41,300 Receiving 445,500 Receiving hours 9,900 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $560,000 $781,000 Direct labor 490,000 481,000 Units completed 16,400 7,700 Direct labor hours 5,400 2,000 Number of setups 370 240 Number of orders 7,000 12,900 Machine hours 23,900 17,400 Receiving hours 3,100 6,800 The company's normal activity is 7,400 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
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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 | $481,900 | Number of setups | 610 |
| Ordering costs | 457,700 | Number of orders | 19,900 |
| Machine costs | 702,100 | Machine hours | 41,300 |
| Receiving | 445,500 | Receiving hours | 9,900 |
Deoro produces two models of dishwashers with the following expected prime costs and activity demands:
| Model A | Model B | |
| Direct materials | $560,000 | $781,000 |
| Direct labor | 490,000 | 481,000 |
| Units completed | 16,400 | 7,700 |
| Direct labor hours | 5,400 | 2,000 |
| Number of setups | 370 | 240 |
| Number of orders | 7,000 | 12,900 |
| Machine hours | 23,900 | 17,400 |
| Receiving hours | 3,100 | 6,800 |
The company's normal activity is 7,400 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 |
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