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Crane 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.

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Crane 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 company's operations. Total estimated overhead costs are $187,500. The overhead cost allocated to the machining activity cost pool is $151,500, and $36,000 is allocated to the machine set-up activity cost pool. Determine the difference in allocation between the two approaches. Determine the difference in allocation between the two approaches

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