Direct materials are $15 per unit for luxury handbags and $11 per unit for deluxe handbags. There were 12,500 direct labor hours, each of which was charged to inventory at $18 per hour. Required: A. Management is trying to decide between using the traditional allocation method based on direct labor hours and using activity-based costing. Calculate the overhead rates for each method. Overhead Cost Traditional allocation $ 320 per direct labor hour Activity -Based Costing: Purchasing $ per purchase order Receiving $ per shipment Machine setups $ per setup Quality control $ per inspection B. One particular batch of 40 luxury handbags had the following specifications: Direct labor hours 8 Purchase orders 4 Shipments received 3 Setups 2 Inspections 12 Calculate the overhead to be allocated to the bags under the traditional and activity -based costing techniques. Overhead Cost Traditional allocation Activity -Based Costing: Purchasing $ Receiving $ Machine setups $ Quality control $ Total $ C. allocates overhead to products on the basis of the activities that cause overhead costs tube incurred. results in more accurate product costing. Direct materials are $15 per unit for luxury handbags and $11 per unit for deluxe handbags. There were 12,500 direct labor hours, each of which was charged to inventory at $18 per hour. Required: A. Management is trying to decide between using the traditional allocation method based on direct labor hours and using activity-based costing. Calculate the overhead rates for each method. Overhead Cost Traditional allocation $ 320 per direct labor hour Activity -Based Costing: Purchasing $ per purchase order Receiving $ per shipment Machine setups $ per setup Quality control $ per inspection B. One particular batch of 40 luxury handbags had the following specifications: Direct labor hours 8 Purchase orders 4 Shipments received 3 Setups 2 Inspections 12 Calculate the overhead to be allocated to the bags under the traditional and activity -based costing techniques. Overhead Cost Traditional allocation Activity -Based Costing: Purchasing $ Receiving $ Machine setups $ Quality control $ Total $ C. allocates overhead to products on the basis of the activities that cause overhead costs tube incurred. results in more accurate product costing