Smithson, Inc. produces two types of gas grills: a family model and a deluxe model. Smithsons controller has decided to use a plantwide overhead rate based on direct labor costs. The president of the company recently 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 companys operations: Family Model Deluxe Model Direct labor costs $72,900 $145,800 Machine hours 2,000 2,000 Setup hours 200 800 Total estimated overhead costs are $437,400. Overhead cost allocated to the machining activity cost pool is $262,440 and $174,960 is allocated to the machine setup activity cost pool. Determine the difference in allocation between the two approaches.

Family Model Deluxe Model

Traditional $45800 $291600

ABC $ $

Difference $ $