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 companys operations. Standard Custom Direct labor costs $ 41,000 $ 99,000 Machine hours 1,430 1,330 Setup hours 110 420 Total estimated overhead costs are $ 304,000 . Overhead cost allocated to the machining activity cost pool is $ 197,000 , and $ 107,000 is allocated to the machine setup activity cost pool.

Compute the overhead rate using the traditional (plantwide) approach