Question 1 0.42/1 View Policies Show Attempt History Current Attempt in Progress 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 Standard Custom $45,000 $113,000 1,140 1,110 106 430 Setup hours 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. X Your answer is incorrect. Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal Predetermined overhead rate 136.89 % of direct labor cost Your answer is correct. Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places, s. 12.25.) 8 Machining S Machine setup $ 6.67 210.82 per machine hour per setup hour e Textbook and Media - Your answer is partially correct. Determine the difference in allocation between the two approaches. (Round answers to O decimal places, e.g. 1,225.) Traditional costing Standard 61600.5 Custom 154685 Activity-based costing Standard Custom e Textbook and Media