Majan Plastic Industries produces two categories of products: Plastic Products and Rubber Products. They are deciding whether to use Traditional costing or activity based costing. Based on next years budget, two cost pools have been developed with the following information:

	Plastic Products	Rubber Products	OH
Direct Labour	10000	5000
Machine Hours	6500	3500	500000
machine setup	2000	3000	100000

Required:

a) Compute the plant-wide overhead rate if overhead is applied based on direct labor hours.

b) Compute the overhead rates using activity based costing.

c) Determine the difference in the amount of overhead allocated to each product between the two methods.