Exercise 17-1 Wilkins 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 companys operations.

Standard	Custom
Direct labor costs	$55,500	$118,000
Machine hours	1,290	1,290
Setup hours	100	440

Total estimated overhead costs are $298,800. Overhead cost allocated to the machining activity cost pool is $197,700, and $101,100is allocated to the machine setup activity cost pool.

(a)Compute the overhead rate using the traditional (plantwide) approach.(Round answers to 2 decimal places, e.g. 12.25%.)

Predetermined overhead rate

% of direct labor cost