XYZ Cc manufactures a variety of products for the local market. The company has been using labour hours to calculate an overhead allocation rate. The total budgeted overhead for the year is N$955 980, the labour hours are estimated at 5 500 hours and machine hours are estimated at 5 000 hours. The newly appointed financial director proposed that the traditional costing system should be changed to an Activity Based Costing (ABC) system. The management accountant provided you with the following information relating to the overheads: Cost pool Budgeted Cost driver and Overheadactivity level expense Set-ups N$169 500500 set-ups N$222 6001 500 quality tests Quality control and testing Material ordering Packaging and dispatch N$192 7801 620 orders N$68 400192 packages Labour related activities N$126 5005 500 labour hours Labour related activities N$126 5005 500 labour hours Machine related activities N$176 2005 000 machine hours N$955 980 Total Budgeted overhead 11 II II REQUIRED MARKS REQUIRED MARKS 6.1 Compute an overhead allocation rate, using traditional costing methods, based on: 6.1.1 Labour hours 3 6.1.2 Machine hours 3 4 6.2. Compute cost driver rates using the principles of activity based costing. TOTAL MARKS 10