Exercise 4-1 (Video) 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 Machine hours Setup hours Total estimated overhead costs are $299,100. Overhead cost allocated to the machining activity cost pool is $192,000, and $107,100 is allocated to the machine setup activity cost pool $50,000 1,200 90 $100,000 1,200 420 Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25.) Predetermined overhead rate % of direct labor cost LINK TO TEXT LINK TO TEXT VIDEO: SIMILAR EXERCISE Compute the overhead rates using the activity-based costing approach Machining Machine setup per machine hour per setup hour LINK TO TEXT LINK TO TEXT EXERCISE VIDEO: SIMILAR Determine the difference in allocation between the two approaches. Traditional costing Standard Custom Standard Custom Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT LINK TO TEXT VIDEO: SIMILAR EXERCISE