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 as information related to the company's operations Standard Custom Direct labor costs $50,000 $100,000 Machine hours 1,500 1.200 Setup hours 90 420 Total estimated overhead costs are $285,000. Overhead cost allocated to the machining activity cost pool is $189,000, and 96,900 is allocated to the machine setup activity cost pool Compute the overhead rate using the traditional (plantwide) approach. (Round answer to decimal places, c.9. 12.25.) Predetermined overhead rate % of direct labor cost LINK TO TEXT LINK TO TEXT VIDEO NIMILAR EXERCISE Compute the overhead rates using the activity-based costing approach Machining per machine hour Machine stup per setup hour CALCULATOR FULL SCREEN INTERVEN RACE NEN Machine setup $ per setup hour LINK TO TEXT LINK TO TEXT VIDEO SIMILAR EXERCISE Determine the difference in allocation between the two approaches. Traditional costing Standard Custom Activity-based costing Standard $ Custom LINK TO TERT LRTO TERT VIDEO SIMILAR ENERGIE