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/ 10 E Question 1 of 1 iew Policies Current Attempt in Progress 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, Payroll Assembling Billing Digging trenches Janitorial Machine maintenance Plant supervision Product design Purchasing materials Selling Machine setups Testing Welding Molding Packaging (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. (Round answers to 2 decimal places, eg. 12.25.) WATERWAYS CORPORATION Funartol estion 1 of 1 Expected Use of Cost Drivers per Activity Activity Cost Pools Estimated Overhead Actual Use of Drivers Cost Drivers $1.948,650 11.791 Labor cost 11.810 30,232,000 Machine hours 1,511,600 30,233.000 "Irrigation installation Machining (all machine use) Customer orders Shipping 25.960 Number of orders 2.360 2,329 N/A N/A traced directly 864 9 8 Design none (direct) Cost per design Number of sales calls 364,800 22,800 Selling 22.980 WATERWAYS CORPORATION Activity Based Overhead Rates Activity Cost Pools Actual Cost Assigned Irrigation installation $ Machining (all machine use) Customer orders Design Selling Taythank and Media