Blackwatch Terry Inc overhead costs and cost drivers areas follows. Direct labor hours are estimated at 100,000 for the year.

Activity Cost Pool Cost Driver Est. Overhead Cost Driver Activity

Ordering and Receiving Orders $ 120,000 500 orders

Machine Setup Setups 297,000 450 setups

Machining Machine hours 1,500,000 125,000 MH

Assembly Parts 1,200,000 1,000,000 parts

Inspection Inspections 300,000 500 inspections

If overhead is applied using activity-based costing, the overhead application rate for ordering and receiving is