Lyons, SA., has identified the following overhead costs and activity drivers for next year:
The following are two of the jobs completed during the year:
The company's normal activity is 20,000 direct labour hours.
Required:

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?

Question

Lyons, SA., has identified the following overhead costs and activity drivers for next year:
The following are two of the jobs completed during the year:
  The company's normal activity is 20,000 direct labour hours.
Required:
  
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?

Quizplus · Accepted Answer

The Answer of Lyons, SA., has identified the following overhead costs and activity drivers for next year:
The following are two of the jobs completed during the year:
  The company's normal activity is 20,000 direct labour hours.
Required:
  
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?

Lyons, SA, Has Identified the Following Overhead Costs and Activity Drivers