Ohla Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor 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 setup. Presented below is information related to the company's operations.

Standard Custom

Direct labor costs 50,000 100,000

Machine hours 1,500 1,200

Setup hours 120 390

Total estimated overhead costs are $296,100. Overhead cost allocated to the machining activity cost pool is $189,000, and $107,100is allocated to the machine setup activity cost pool.

QUESTION: Determine the difference in allocation

Activity-based costing

Standard:

Custom:

Other info that may be useful:

Overhead rates for machining are $70 per machine hour and $210 per setup hour for machine setup. The predetermined overhead rate is 197.4% of the direct labor cost.