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.

Standard

Custom

Direct labor costs$50,000$100,000Machine hours1,5001,500Setup hours90360

Total estimated overhead costs are $313,500. Overhead cost allocated to the machining activity cost pool is $210,000, and $103,500is allocated to the machine setup activity cost pool.

(a)

Compute the overhead rate using the traditional (plantwide) approach.(Round answer to 2 decimal places, e.g. 12.25.)

Predetermined overhead rateenterthe overhead rate as percentage of direct labor cost rounded to 2 decimal places

% of direct labor cost