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
Activity Cost Pools		Cost Drivers		Estimated Overhead		Expected Use of Cost Drivers per Activity		Actual Use of Drivers
Irrigation installation		Labor cost		$1,811,920		12,760		12,745
Machining (all machine use)		Machine hours		1,600,250		32,005,000		32,006,000
Customer orders		Number of orders		29,900		2,300		2,266
Shipping		none (direct)		N/A		N/A		traced directly
Design		Cost per design		679		7		6
Selling		Number of sales calls		334,500		22,300		22,490

Actual Cost Assigned WATERWAYS CORPORATION Activity Based Activity Cost Overhead Pools Rates Irrigation installation $ Machining (all machine use) Customer orders $ Design Selling e Textbook and Media How would you classify each of the following activities by level-unit level, batch level, product level, or facility level? Testing of products (if all items are tested) Testing of products (if all items are not tested) Designing new products >