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7.
Lim Co. has idnetified the following overhead costs & activity drivers for next year:
| Overhead Item | Expected Cost | Activity Driver | Expected Quantity |
| Setup Costs | $150000 | Number of Setups | 1200 |
| Ordering Costs | 40000 | Number of Orders | 10000 |
| Maintenance | 200000 | Machine Hours | 16000 |
| Power | 20000 | Kilowatt hours | 100000 |
The following are two of the jobs completed during the year:
| | Job XX | Job YY |
| Directed Materials | $2250 | $2500 |
| Directed labor | 3000 | 1875 |
| Units completed | 375 | 300 |
| Direct labor hours | 90 | 110 |
| Number of setups | 6 | 8 |
| Number of orders | 8 | 15 |
| Machine hours | 180 | 150 |
| Kilowatt hours | 90 | 120 |
The company's normal activity is 20000 direct labor hours.
REQUIRED:
a. Determine the unit cost for each job using direct labor hours to apply overhead. (Round amounts to 2 decimal paces).
b. Determine the unit cost for each job using the four activity drivers. (round amounts to 2 decimal places).
c. Which method produces the more accurate cost assignment? Why?
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