(II) Product level activities - The cost of some activities are driven by the creation of a new product line and its maintenance. These activities are known as Product level activities. Examples are: (1) Designing the product. (II) Producing parts to a certain specified limit. (III) Advertising cost, if advertisement is for individual products. (III) Facility level activities - The cost of some activities cannot be related to a particular product line, instead they are related to maintaining the building and facilities. These activities are known as Facility level activities. Examples are: (1) Maintenance of buildings. (II) Plant security. (III) Production manager's salary. (IV) Advertising campaigns promoting the company. Illustration 3 The cost accountant of ABC Manufacturing attended a workshop on activity-based costing and was impressed by the results. After consulting with the production personnel, he prepared the following information on cost drivers and the estimated volume for each driver. Products Total B 45,000 25,000 40.0 15,000 30.0 5,000 55.0 Units produced Direct materials Cost Per Unit in Direct labour in 15.0 15.0 15.0 Cost driver Cost driver volume Total B 125 2.500 50 2.000 Number of setups Machine Hours Direct labour hours Number of Inspection 75 1,500 15,000 25 250 6,000 45,000 100 25.000 50 5.000 25 r57 The cost accountant also determined how much overhead costs were incurred in each of the four activities as follows: Overhead costs in Activity Machining Setup Machining Total of Machining Overhead Cost 1,50,000 7.50.000 9.00.000 Assembly Assembly Inspection 360,000 90.000 Taal Un non