Majan Plastic Industries produces two categories of products: Plastic Products and Rubber Products. They are deciding whether to use Traditional costing or activity based costing. Based on next year's...

Extracted text: Majan Plastic Industries produces two categories of products: Plastic Products and Rubber Products. They are deciding whether to use Traditional costing or activity based costing. Based on next year's budget, two cost pools have been developed with the following information: Plastic Products Rubber Products OH Direct Labour 10000 5000 Machine Hours 6500 3500 500000 machine setup 2000 3000 100000 Required: a) Compute the plant-wide overhead rate if overhead is applied based on direct labor hours. b) Compute the overhead rates using activity based costing. c) Determine the difference in the amount of overhead allocated to each product between the two methods.