Lyons,Inc,has Identified the Following Overhead Costs and Activity Drivers for Next

Essay

Lyons,Inc.,has identified the following overhead costs and activity drivers for next year:
$\begin{array}{lrlr} \underline{\text {Overhead Item}}& \underline{\text {Expected Cost}}& \underline{\text {Activity Driver}}& \underline{\text {Expected Qty.}}\\\text { Setup costs } & \$ 150,000 & \text { Number of setups } & 1,200 \\\text { Ordering costs } & 40,000 & \text { Number of orders } & 10,000 \\\text { Maintenance } & 200,000 & \text { Machine hours } & 16,000 \\\text { Power } & 20,000 & \text { Kilowatt hours } & 100,000\end{array}$ The following are the two product models completed during the year:
$$\begin{array} { l r r } & \text { Madel XX } & \text { Madel YY } \\\text { Direct materials } & \$ 2,250 & \$ 2,500 \\\text { Direct labour } & 3,000 & 1,875 \\\text { Units completed } & 375 & 300 \\\text { Direct labour hours } & 90 & 110 \\\text { Nurber of setsps } & 6 & 8 \\\text { Nurmber of arders } & 8 & 15 \\\text { Machine hours } & 180 & 150 \\\text { Kilowatt hours } & 90 & 120\end{array}$$ The company's normal activity is 20,000 direct labour hours.
a.Determine the unit cost for each job using direct labour hours to apply overhead.
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?