Blossom Inc. makes two types of handbags: standard and custom. The controller has decided to use a plant- wide overhead rate based on direct labour costs. The president has heard of activity-based costing and wants to see how the results would differ if this systems were used. Two activity cost pools were developed machining (machine hours) and machine set-up Inumber of set-upsl. The total estimated machine hours is 1,500, and the total estimated number of setups is 500. Presented below is information related to the company's operations. Standard Custom Direct labour costs $50,000 $100,000 Machine hours 500 1.000 Set-up hours 100 400 Total estimated overhead costs are $345,000. The overhead cost allocated to the machining activity cost pool is $184,500, and $160,500 is allocated to the machine set-up activity cost pool (a) Your answer is correct. Calculate the overhead rate using the traditional (plant-wide approach. (b) Predetermined overhead rate 2% of direct labour cost Your answer is correct Calculate the overhead rate using the activity-based costing approach Overhead Rate (c) Cost Pool Machining 123 per machine hour Machine set-up $ 32 per set-up hour Determine the difference in allocation between the two approaches Attempts 1 of 2 used Attempts: 1 of 2 used Your answer is correct. Calculate the overhead rate using the activity-based costing approach. Cost Pool Machining Overhead Rate 123 per machine hour Machine set-up 321 per set-up hour (c) Attempts: 1 of 2 used Activity-based costing Difference Determine the difference in allocation between the two approaches. Traditional costing Standard $ Custom LA Save for Later +A