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. Direct labor costs Machine hours Setup hours Standard $50,000 1,200 120 Custom $100,000 1,200 420 Total estimated overhead costs are $289,200. Overhead cost allocated to the machining activity cost pool is $192,000, and $97,200 is allocated to the machine setup activity cost pool. 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 Compute the overhead rates using the activity-based costing approach. Machining per machine hour $ Machine setup per setup hour $ Determine the difference in allocation between the two approaches. Traditional costing, Standard $ Custom $ Activity-based costing Standard Custom