Question 9 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 activ 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 $305,400. Overhead cost allocated to the machining activity cost pool is $192,000, and $113,400 is allocated to the machine setup activity cost pod (a) Your answer is correct. Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25.) Predetermined overhead rate 203.6% of direct labor cost Click if you would like to Show Work for this question: Open Show Work (b) Your answer is correct. Compute the overhead rates using the activity-based costing approach. Machining 80 per machine hour Machine setup 210 per setup hour Click if you would like to Show Work for this question: Open Show Work Determine the difference in allocation between the two approaches. Traditional costing Standard $ Custom $ Activity-based costing Standard $ Custom $