Ch 4: Homework Question 4 of 13 > 0.67/1 Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor costs. The president has 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 Standard $50,000 1.200 120 Custom $100,000 1,500 360 Total estimated overhead costs are $294.600. Overhead cost allocated to the machining activity cost pool is $189.000, and $105,600 is allocated to the machine setup activity cost pool. (a) Your answer is correct. Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, es. 12.25.) 196.40 % of direct labor cost Predetermined overhead rate Type here to search Compute the overhead rates using the activity-based costing approach. Machining 70 per machine hour Machine setup $ 220 per setup hour Determine the difference in allocation between the two approaches. Traditional costing Standard 9820000 Custom 19640000 Activity-based costing Standard $ Custom $