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Ernest, Inc The Following Are Two of the Jobs Completed During the Drivers

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Ernest, Inc., has identified the following overhead costs and cost drivers for next year:  Overhead Item  Expected Cost  Cost Driver  Expected Quantity  Setup costs £320,000 Number of setups 4,000 Ordering costs 120,000 Number of orders 20,000 Maintenance 480,000 Machine hours 24,000 Power 40,000 Kilowatt hours 160,000\begin{array}{lclc}\text { Overhead Item } & \text { Expected Cost } &{\text { Cost Driver }} & \text { Expected Quantity } \\\text { Setup costs } & £ 320,000 & \text { Number of setups } & 4,000 \\\text { Ordering costs } & 120,000 & \text { Number of orders } & 20,000 \\\text { Maintenance } & 480,000 & \text { Machine hours } & 24,000 \\\text { Power } & 40,000 & \text { Kilowatt hours } & 160,000\end{array} The following are two of the jobs completed during the year:  Job 320 Job 321 Direct materials £8,000£19,000 Direct labour £6,400£12,000 Units completed 8001,600 Direct labour hours 240500 Number of setups 1220 Number of orders 2040 Machine hours 400600 Kilowatt hours 280400\begin{array}{lrr}&\text { Job } 320&\text { Job } 321\\\text { Direct materials } & £ 8,000 & £ 19,000 \\\text { Direct labour } & £ 6,400 & £ 12,000 \\\text { Units completed } & 800 & 1,600 \\\text { Direct labour hours } & 240 & 500 \\\text { Number of setups } & 12 & 20 \\\text { Number of orders } & 20 & 40 \\\text { Machine hours } & 400 & 600 \\\text { Kilowatt hours } & 280 & 400\end{array} The company's normal activity is 32,000 direct labour hours. (Round amounts to two decimal places.)
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 cost drivers.
c.Which method produces the more accurate cost assignment? Why?

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