Direct labor or machine hours may not be the appropriate cost driver for overhead in all areas of manufacturing due to the complexities of many manufacturing processes. Many companies use activity-based costing (ABC) which uses multiple drivers (items that consume resources) rather than just one driver to apply overhead to their activities. With ABC, a company can use a cost driver that has a direct cause/effect relationship in its applied overhead costs. Waterways looked into ABC as a method of costing because of the variety of items it produces and the many different activities in which it is involved. The activities listed below area sample of possible cost pools for Waterways. Payroll Assembling Billing Plant supervision Digging trenches Product design Janitorial Purchasing materials Machine maintenance- Selling Machine setups Testing Molding Welding Packaging possible ABC system for Waterways. (Round answers to 2 decimal places, eg. 12.25.) WATERWAYS CORPORATION Activity Cost Pools Estimated Cost Drivers Overhead Estimated Use of Cost Drivers per Activity Use of Cost Drivers Irrigation installation Labor cost $1,903,040 12,520 12,498 Machining (all machine use) Machine hours 1,708,450 34,169,000 34.170,000 Customer orders Number of orders 30,030 2.310 2,282 Shipping none (direct) N/A N/A traced directly Design Selling Cost per design 896 8 7 Number of sales calls 384,000 24,000 24.200 Activity Cost Pools Irrigation installation. Machining (all machine use) Customer orders Design Selling WATERWAYS CORPORATION Activity- Based Overhead Rates OH Cost Assigned $