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Machine hours or direct labor is not always used by companies as it may not be the appropriate cost driver for overhead in all cases,
Machine hours or direct labor is not always used by companies as it may not be the appropriate cost driver for overhead in all cases, due to the complexity of the manufacturing processes. Some companies consider Activity Based Costing (ABC) as a better alternative. ABC uses multiple cost drivers rather than just one, to apply overhead to the various activities. Using ABC, a company can use the cost driver that has the best cause/effect relationship in its applied overhead costs. Sweet Wave Bakery 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 are a sample of possible cost pools for Sweet Wave Bakery. Instructions (a) Match the best cost driver to the cost poolMachine Maintenance Billing Machine Set Ups Packaging Baking Plant Supervision Dough Callinn Drag answer here cost per square feet maintained machine hours Drag answer here cost per design 5 Drag answer here : Drag answer here 5 Drag answer here number of maintenance hours number of tests number of set ups needed Drag answer here number of parts number of employees Selling Drag answer here number of employees Product design Drag answer here number of purchase orders Janitorial Drag answer here number of sales calls Mixing Drag answer here number of billings sent Assembling Drag answer here pounds of material Testing Drag answer here cost per package Purchasing Materials Drag answer here labor hours
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