Concord, 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:

		Family Model		Deluxe Model
Direct labor costs		$ 72,000		$ 144,000
Machine hours		2,000		2,000
Setup hours		200		800
Packaging hours		50		75

The estimated overhead of $ 432,000 is allocated as follows: machining activity cost pool $ 230,400, machine set up $ 163,200 and packaging $ 38,400. (1) 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		$ enter a dollar amount per hour rounded to 2 decimal places per hour
Machine set up		$ enter a dollar amount per hour rounded to 2 decimal places per hour
Packaging		$ enter a dollar amount per hour rounded to 2 decimal places per hour

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

		Overhead Allocation
Family model		$ enter a dollar amount
Deluxe model		$ enter a dollar amount

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

$ enter the amount of difference in dollars

The additional cost pool select an option does not benefitbenefit the overhead cost allocation significantly.