Elle 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 and machine set-up. Presented below is information related to the companys 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 $255,000. The overhead cost allocated to the machining activity cost pool is $165,000, and $90,000 is allocated to the machine set-up activity cost pool.

c)

Determine the difference in allocation between the two approaches. (Enter negative answers using either a negative sign preceding the number e.g. -2,945 or parentheses e.g. (2,945).)

		Traditional costing (A)		Activity-based costing (B)		Difference (A) (B)
Standard		$		$		$
Custom		$		$		$