Identifying Cost Drivers. Palisades Company identified the activities listed in the following as being most important (step 1 and step 2 of activity-based costing), and it formed cost pools for each activity:

1. Purchasing raw materials
2. Inspecting raw materials
3. Storing raw materials
4. Maintaining production equipment
5. Setting up machines to produce batches of product
6. Testing finished products

Required:

Perform step 3 of the activity-based costing process by identifying a possible cost driver for each activity.