Pharoah 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
Direct labour costs			$50,000				$100,000
Machine hours			500				1,000
Set-up hours			100				400

Total estimated overhead costs are $300,000. The overhead cost allocated to the machining activity cost pool is $174,000, and $126,000 is allocated to the machine set-up activity cost pool.

Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 0 decimal places, e.g. 125.) % of direct labor cost Compute the overhead rates using the activity-based costing approach. (Round answers to 0 decimal places, e.g. 125.) Machining $ per machine hour Machine setup $ per setup hour Determine the difference in allocation between the two approaches. Traditional CostingStandard $ Custom $ Activity Based CostingStandard $ Custom $