Waterways Problem 04 b-c 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 driver 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 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 area sample of possible cost pools for Waterways. Assembling Billing Digging trenches Janitorial Payroll Plant supervision Product design Purchasing materials Selling Testing Welding Machine maintenance Machine setups Molding Packaging 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. (Round answers to 2 decimal places, e.g. 12.25.) WATERWAYS CORPORATION Estimated Overhead Actual Use of Drivers Cost Drivers Activity Cost Pools Irrigation installation Machining (all machine use) Customer orders Labor cost Expected Use of Cost Drivers per Activity 13,400 33,977,000 2,480 N/A 8 $2,023,400 1,698,850 27,280 N/A Machine hours 13,381 33,978,000 2,447 traced directly Number of orders Shipping Design Selling none (direct) Cost per design 896 7 Number of sales calls 377,400 22,200 22,380 WATERWAYS CORPORATION Activity Cost Pools Activity- Based Overhead Rates Actual Cost Assigned Irrigation installation $ $ $ Machining (all machine use) Customer orders Design Selling How would you classify each of the following activities by level-unit level, batch level, product level, or facility level? Testing of products (if all items are tested) Testing of products (if all items are not tested)