Challenge Exercise 4-1 Smithson, Inc. produces two types of gas grills: a family model and a deluxe model. Smithson's controller has decided to use a plantwide overhead rate based on direct labor costs. The president of the company recently 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 and machine setup, Presented below is information related to the company's operations Direct labor costs Machine hours Setup hours Family Model $71,700 2,000 200 Deluxe Model $143,400 2,000 800 Total estimated overhead costs are $430,200. Overhead cost allocated to the machining activity cost pool is $258,120 and 172,080 is allocated to the machine setup activity cost pool. Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 15.25.) Overhead rate Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places, e.g. 15.25. Overhead Rate Machining per hour Machine set up per hour Determine the difference in allocation between the two approaches. Family Model Deluxe Model Traditional ABC