Bonita, 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:

The estimated overhead of $$435,600$ is allocated as follows: machining activity cost pool $$232,320,$ machine set up $$164,560$ and

packaging $$38,720.$

$(1)$

Determine the overhead rates using the activity$-$based costing approach with three cost pools. $($Round answers to $2$

decimal places, e$.$g$.15\mathrm{.}25.)$

Overhead Rate

Machining

$

per hour

Machine set up

$

per hour

Packaging

$

per hour

$(2)$

Calculate the overhead allocation for the family model and the deluxe model using three activity cost pools.

Overhead 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.