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.

Assembling		Payroll
Billing		Plant supervision
Digging trenches		Product design
Janitorial		Purchasing materials
Machine maintenance		Selling
Machine setups		Testing
Molding		Welding
Packaging

Using the following information, determine the overhead rates and the actual cost assigned for each of the activity cost pools in a possible ABC system for Waterways. (Round answers to 2 decimal places, e.g. 12.25.) WATERWAYS CORPORATION Expected Use of Cost Activity Cost Estimated Drivers per Actual Use of Pools Cost Drivers Overhead Activity Drivers Irrigation installation Labor cost $1,948,320 13,530 13,509 Machining (all machine use) Machine hours 1,732,650 34,653,000 34,654,000 Customer orders Number of orders 27,830 2,530 2,503 Shipping none (direct) N/A N/A traced directly Design Cost per design 791 7 6 Selling Number of sales calls 297,000 19,800 20,020 WATERWAYS CORPORATION Activity- Based Overhead Rates Activity Cost Pools Actual Cost Assigned Irrigation installation $ $ Machining (all machine use) Customer orders Design Selling