Answer:
WATERWAYS CORPORATION
1. Overhead Rates and Actual Cost
Activity Cost Activity-based Actual Cost
Pools Overhead Rates Assigned
Irrigation Installation $148 ($1,928,440/13,030) $1,925,480 ($148 * 13,010)
Machining $0.05 $1,668,800
(all machine use) ($1,668,750/33,375,000) ($0.05 * 33,376,000)
Customer Orders $11 ($28,600/2,600) $28,182 ($11 * 2,562)
Design $109 ($763/7) $654 ($109 * 6)
Selling $15 ($306,000/20,400) $309,150 ($15 * 20,610)
2. Classification of activities by level, unit level, batch level, product level, or facility level:
Testing of products (if all items are tested) Unit level
Testing of products (if all items are not tested) Batch level
Designing new products Product level
Packaging Unit level
Molding Product level
Assembling Batch level
Depreciation Facility level
Machine maintenance Facility level
Advertising Product level
Equipment setups Batch level
Electricity required to run equipment Unit level
Requisitioning materials Unit level
Explanation:
a) Data and Calculations:
ABC system for Waterways.
WATERWAYS CORPORATION
Activity Cost Estimated Expected Use
Pools Cost Drivers Overhead of Cost Drivers Actual Use
per Activity of Drivers
Irrigation Installation Labor cost $1,928,440 13,030 13,010
Machining
(all machine use) Machine hours 1,668,750 33,375,000 33,376,000
Customer orders Number of orders 28,600 2,600 2,562
Shipping none (direct) N/A N/A traced directly
Design Cost per design 763 7 6
Selling Number of sales calls 306,000 20,400 20,610
