CALCULATOR PRINTER VERSION 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 ( 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 app 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 Balling Digging trenches Janitoriai Machine maintenance Machine setups Molding Packaging Payroll Plant supervision Product design Purchasing materials Selling Testing Welding ES CALCULATOR PRINTER VERSION 4 BACK NEXT 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 Activity Cost Pools Irrigation installation Machining (all machine use) Customer orders Shipping Design Selling Cost Drivers Labor cost Machine hours Number of orders none (direct) Cost per design Number of sales calls Estimated Overhead $2,222,550 1,514,050 34,970 N/A 882 318,000 Expected Use of Cost Drivers per Activity 13,470 30,281,000 2,690 N/A Actual Use of Drivers 13,448 30,282,000 2,657 traced directly 8 21,390 9 21,200 WATERWAYS CORPORATION Activity Based Activity Cost Overhead Pools Rates Actual Cost Assigned Irrigation installation X Machining (all machine use) X Customer orders Design Selling LINK TO TEXT LINK TO TEXT