Carla Vista 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 system were used. Two activity cost pools were developed: machining (machine hours) and machine set-up (number of set- ups). The total estimated machine hours is 1,500, and the total estimated number of setups is 500. Presented below is information related to the companys 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 $240,000. The overhead cost allocated to the machining activity cost pool is $162,000, and $78,000 is allocated to the machine set-up activity cost pool.

(a)

Calculate the overhead rate using the traditional (plant-wide) approach.

Attempts: 2 of 2 used

(b)

Calculate the overhead rate using the activity-based costing approach.

Cost Pool		Overhead Rate
Machining		$enter a dollar amount per machine hour	per machine hour
Machine set-up		$enter a dollar amount per set-up hour	per set-up hour

(c)

Determine the difference in allocation between the two approaches.

		Traditional costing		Activity-based costing		Difference
Standard		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
Custom		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount

PS. I did A AND B, I JUST NEED C