Exercise 18-1 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. Standard Custom Direct labor costs $45,000 $113,000 Machine hours 1,140 1,110 Setup hours 106 430 Total estimated overhead costs are $308,000. Overhead cost allocated to the machining activity cost pool is $195,000, and $113,000 is allocated to the machine setup activity cost pool. Your answer is correct. Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25.) Predetermined overhead rate 194.93 % of direct labor cost LINK TO TEXT LINK TO TEXT VIDEOSIMILAR EXERCISE Your answer is correct. Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places, e.g. 12.25.) Machining Machine setup 86.66 per machine hour 210.82 per setup hour LINK TO TEXT LINK TO TEXT VIDEO: SIMILAR EXERCISE Your answer is partially correct. Try again. Determine the difference in allocation between the two approaches. (Round answers to 0 decimal places, e.g. 1,225.) Traditional costing Standard 87750 Custom 220350 FULL SCREEN PRINTER VERSION 4 BACK NEXT Machining Machine setup 86.66 per machine hour 210.82 per setup hour LINK TO TEXT LINK TO TEXT VIDEO: SIMILAR EXERCISE Your answer is partially correct. Try again. Determine the difference in allocation between the two approaches. (Round answers to 0 decimal places, e.g. 1,225.) Traditional costing Standard 87750 Custom 220350 Activity-based costing Standard 121139.32 Custom 186845.2 LINK TO TEXT LINK TO TEXT VIDEO: SIMILAR EXERCISE