Final answer:
The question is about Durban Metal Products and its use of activity-based costing to determine the cost of producing metal parts. Activity-based costing assigns costs based on specific activities that contribute to the production, and the company has several activity cost pools directly tied to cost drivers.
Step-by-step explanation:
The question pertains to Durban Metal Products, a company that specializes in making metal parts and utilizes activity-based costing (ABC) for internal decision-making. Activity-based costing is a more precise method of assigning costs to products or services based on the activities that go into producing them.
This methodology assigns company resources to products and services based on the activities needed to produce each product or service. The query involves understanding the company's activity cost pools.
Typically, cost pools might include activities such as procurement, machine setups, quality control, and order processing, to name a few examples. Each activity cost pool is associated with its own unique measure of activity, known as a cost driver.