Smithson, Inc. produces two types of gas grills: a family model and a deluxe model. Smithson's 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 company's operations: Direct labor costs Machine hours Setup hours Family Model Deluxe Model $75,600 $151,200 2.000 2,000 200 800 Total estimated overhead costs are $453,600. Overhead cost allocated to the machining activity cost pool is $272,160 and $181,440 is allocated to the machine setup activity cost pool. Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 15.25.) Overhead rate $ e Textbook and Media Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places, e.g. 15.25.) Overhead Rate Machining $ per hour Machine set up $ per hour Determine the difference in allocation between the two approaches. Family Model Deluxe Model Traditional $ ABC $ Difference $ e Textbook and Media Smithson, Inc. decided to implement the activity-based costing approach and was quite successful in its use. However, the controller is wondering if instead of only two activity cost pools, they should expand to three activity cost pools based on the following: Direct labor costs Machine hours Setup hours Packaging hours Family Model Deluxe Model $75,600 $151,200 2,000 2.000 200 800 50 75 The estimated overhead of $453,600 is allocated as follows: machining activity cost pool $241,920, machine set up $171,360 and packaging $40,320. Determine the overhead rates using the activity-based costing approach with three cost pools. (Round answers to 2 decimal places, e.g. 15.25.) Overhead Rate Machining per hour per hour Machine set up $ Packaging per hour Activate Windows Go to Settings to activate Windows. Determine the overhead allocation for the family model and the deluxe model using three activity cost pools. Oerhead Allocation Family model $ Deluxe model $ What is the difference in allocation between two activity cost pools and three activity cost pools? Is the difference in allocation worth using the third activity cost pool? Difference $ The additional cost pool the overhead cost allocation significantly