Waterways Continuing Problem (This is a continuation of the Waterways Problem from Chapters 14 through 16.) WCP17 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 drver 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 the many diferent activities in which it is involved. The activities listed below are a sample cost pools for Waterways Digging trenches Janitorial Machine maintenance Machine setups Molding Packaging Payroll Plant supervision Product design Purchasing materials Selling Testing Welding Instructions (a) For each of these cost pools, what would be the likely activity cost driver? (b) 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. WATERWAYS CORPORATION Expected Use of Cost Estimated Overhead Drivers per Actual Use of Cost Drivers Labor cost Drivers Activity Cost Pools Irrigation installation Machining (all machine use) Customer orders $1,998,432 30,636 820 350,400 12,960 1,670,400 33,408,000 2,553 12,941 33,409,000 2,520 Machine hours NA traced directy 22,100 (c) How would you classify each of the following activities by level--unit level, batch level, product level, Number of orders none (direct) Cost per design Number of sales calls Shipping 21,900 Selling or facility level? Testing of products Designing new products Packaging Molding Machine maintenance Advertising Equipment setups Electricity required to run equipment Requisitioning materials