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 $50,000 $100,000 Machine hours 1,200 1,200 Setup hours 90 390 Totat estimated overhead costs are $292,800 Overhead lost allocated to the machining activity cost pool is $192,000, and $100,800 is allocated to the machine setup activity cost pool Compute the overhead rate using the traditional (plantwide) approach (Round answer to 2 decimal places 9. 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 Compute the overhead rates using the activity-based costing approach. Machining per machine hour Machine setup $ per setup hour LINK TO TEXT LINK TO TEXT Determine the difference in allocation between the two approaches. Traditional costing Standard $ Custom $ Activity-based costing Standard $ Custom $