Elle Inc. makes two types of handbags: standard and custom. The company currently uses 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. To investigate ABC - two activity cost pools were developed: machining hours and machine set-up hours. Presented below is information related to the company's operations. For the standard handbag and for the custom handbag the Direct labour costs are $50,000 and $100,000 respectively, For the standard handbag and for the custom handbag the Machining hours are 500 and 1,000 respectively. For the standard handbag and for the custom handbag the Machine Set-up hours are 100 and 400 respectively. Total estimated overhead costs are $277,500. The overhead cost allocated to the machining hours activity cost pool is $177,000, and $100,500 is allocated to the machine set-up hours activity cost pool. Instructions a. Calculate the overhead rate using the traditional (plant-wide) approach. Show your answer as a percentage of direct labour cost. b. Calculate the two overhead rates using the activity-based costing approach. c. Calculate the overhead for both the Standard Handbag and the Custom Handbag using both the Traditional Costing Method and Activity-based Costing. Add a sentence explaining the difference in allocation between the two approaches