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4. Calculating traditional and ABC overhead rates Kevin Malone has been studying his department's profitability reports for the past six months. He has just completed a managerial accounting course and is beginning to question the company's approach to allocating overhead to products based on machine hours. The current department overhead budget of $1,220,000 is based on 40,000 machine hours. In an initial analysis of overhead costs, Kevin has identified the following activity cost pools. Cost Pool Product assembly Machine setup and calibration Product inspection Raw materials storage Expected Cost $ 600,000 420,000 80,000 120,000 $ 1,220,000 Expected Activities 40,000 machine hours 2,100 setups 2,000 batches 500,000 pounds a. Calculate the company's overhead rate based on machine hours. b. Calculate the company's overhead rates using the proposed activity-based costing pools