General Motors (GM) operates multiple production departments with varying overhead costs. The company allocates overhead based on direct labor hours and machine hours. Given the following details:

• Overhead Costs:
  • Setup Costs: $200,000
  • Material Handling Costs: $300,000
  • Inspection Costs: $150,000
• Activity Drivers:
  • Number of setups: 50
  • Material moves: 800
  • Number of inspections: 1000
• Direct Labor Hours: 10,000
• Machine Hours: 5,000

Calculate the predetermined overhead rates for each activity and allocate the overhead costs to the production departments using the activity-based costing (ABC) method. Provide a detailed explanation of the allocation process and discuss the advantages of ABC over traditional costing methods.