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 $50,000 Custom $100,000 1,200 1,500 Setup hours 90 420 Total estimated overhead costs are $301,200. Overhead cost allocated to the machining activity cost pool is $189,000, and $112,200 is allocated to the machine setup activity cost pool. (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 eTextbook and Media 200.8 % of direct labor cost (b) Your answer is correct. Compute the overhead rates using the activity-based costing approach. (c) Machining $ Machine setup Your answer is incorrect. 70 per machine hour 220 per setup hour Determine the difference in allocation between the two approaches. Traditional costing Standard Custom Activity-based costing Standard Custom $ $ $ $ Attempts: 2 of 7 used Attempts: 1 of 7 used