3a. Activity-based costing (ABC costing) defines 5 levels of activity that we will identify with letters for the purposes of this exercise:

U: unit-level (Unit-level)

L: batch-level (Batch-level)

P: Product-level

C: Customer-level

S: organization-sustaining

Todo Inc., which manufactures various products, has the following activities. Classify each activity within one of the levels. Put the corresponding letter in the box.

level	Activity
	Production line employees assemble the products.
	Employees from the Human Resources department train line employees.
	Three employees take care of the inventory of the parts that are used to manufacture the products.
	Several engineers design new products.
	A purchasing clerk places new orders for materials to manufacture the ordered product.
	A warehouse clerk issues material orders for production.
	Two mechanical engineers perform periodic preventative maintenance on equipment used for manufacturing.
	The Marketing department prepares the quarterly catalog of products for sale.

3B. Calculate activity rates

Pool Services, Inc. is a service company dedicated to the maintenance and cleaning of home pools. Your owner understands that the costs depend on the number of gallons of water the pool contains, the distance to reach each customer, and the total number of customers. It also depends on whether they are pools of continuous use that require more maintenance or pools of little use that require more maintenance and the cleaning of the filters is considered separately since it requires an hour of labor from the employee and specific materials.

Required:

cost activities	Expected activity for each activity level unit of measure (inducers)	Total Cost	Activity rate
Low-use pool maintenance	5,400,000 gallons of high-use pool water	$50,000
High-use pool maintenance	1,300,000 gallons of high-use pool water	$28,800
Filter cleaning	300 filter maintenance	$25,500
Trips to each pool	16,000 miles	$56,600
Billing and customer service	100 clients	$32,600