Elle Inc. has two types of handbags: standard and custom. The controller has decided to use a plant-wide overhead rate based on direct labour hours. 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 and machine set-up. 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 $277,500. The overhead cost allocated to the machining activity cost pool is $177,000, and $100,500 is allocated to machine set-up activity cost pool.

Please answering the following questions:

(a) Calculate the overhead rate using the traditional approach.

Answer% of direct labour cost.

(b) Calculate the overhead rates using the activity-based costing approach.

Machining: $________ per machine hour Machine setup: $________per setup hour.

(c) Calculate the allocation of overhead to the standard handbag under both approaches:

Traditional: $_________ Activity-Based: $________

(d) Calculate the allocation of overhead to the custom handbag under both approaches:

Traditional: $________ Activity-Based: $________