Cleworth Enterprises has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year:

$\backslash$table$[[$Cost Pool,Overhead Costs,,Cost driver,Activity level$],[$Supervision of direct labor,$$320,000,$Direct labor$-$hours,$800,000,],[$Machine maintenance,$$120,000,$Machine$-$hours,$960,000,],[$Facility rent,$$200,000,$Square feet of area,$100,000,],[,$ Total overhead costs,$$640,000,,,]]$

The accounting records show the Mossman Job consumed the following resources:

Cost driver

Direct labor$-$hours

Machine$-$hours

Square feet of area

Actual level

$200$

$1,600$

$50$

Which method of allocation probably best estimates actual overhead costs used? Why?

Single direct labor$-$hours cost driver because it is best to allocate total costs uniformly to individual jobs.

Single direct labor$-$hours cost driver because it is easiest to analyze and interpret.

Three activity$-$cost drivers because they best reflect the relative consumption of resources.

Three activity$-$cost drivers because product costs can be significantly cross$-$subsidized