Ivanhoe 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 (machine hours) and machine set-up (number of set-ups). The total estimated machine hours is 1,500, and the total estimated number of setups is 500. Presented below is information related to the company's operations. Standard Custom $50,000 $100,000 Direct labour costs Machine hours Set-up hours 500 1,000 100 400 Total estimated overhead costs are $202,500. The overhead cost allocated to the machining activity cost pool is $154,500, and $48,000 is allocated to the machine set-up activity cost pool. (a) Your answer is correct Calculate the overhead rate using the traditional (plant-wide) approach of direct labour cost Predetermined overhead rate (b) Your answer is correct. Calculate the overhead rate using the activity-based costing approach. Cost Pool Overhead Rate Machining 103 per machine hour Machine set-up $ 96 per set-up hour Attempts: 1 of 2 used c) Determine the diference in allocation between the two approaches. Traditional costing Activity-based costing Difference Starvdard $ 5 Custom