Allocate overhead costs using activity rates for different cost pools.

Activity	Cost	Activity Driver	Driver Quantity
Setup activities	$75,000	Number of setups	600 setups
Machine processing	$250,000	Machine hours	12,000 hours
Quality control	$40,000	Number of inspections	2,500 inspections

Requirements:

Calculate the activity rate for each cost pool using ABC.

Allocate overhead costs to products X, Y, and Z based on activity usage.

Discuss the advantages of using ABC for cost allocation.