Metlock Inc. always stayed abreast of production methods, technology, and business insight. However, it recently realized it had ignored an important business consideration: the cost of MOH. The company had not considered more precise MOH cost allocation methods until now.

To right this, managers examined the accounting system and interviewed production managers to understand costs. The following four key activity areas emerged as primary sources for all MOH, and related cost driver information is also included here.

$\backslash$table$[[$Activity$,$Cost,Quanti,ty of Cost Driver$],[$Facility$-$level costs$*,$$$337,500,45,000,$square feet$],[$Setup costs,$164,500,7,000,$setups$],[$Automation costs,$920,000,40,000,$machine hours$],[$Manual production costs,$757,500,101,000,$direct labor hours$]]$

$*$Includes rent, depreciation, and utilities

$($a$)$

Your answer is correct.

Organize the activity areas into the most appropriate cost hierarchy levels.

$\backslash$table$[[$Key Activity,Cost Hierarchy$],[$Facility$-$level costs,Facility$-$level hat$(**)$