Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a plant wide 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 $100,000

Machine hours 1,500 1,200

Setup hours 90 390

Total estimated overhead costs are $299,400. Overhead cost allocated to the machining activity cost pool is $189,000, and $110,400is allocated to the machine setup activity cost pool.

Compute the overhead rate using the traditional (plant wide) approach. Round to two decimal places

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

_________% of direct labor cost

Compute the overhead rates using the activity-based costing approach.

Machining$___________ enter a dollar amount per machine hour

Machine setup$__________enter a dollar amount per setup hour

Determine the difference in allocation between the two approaches.

Traditional costing

Standard$___________ enter a dollar amount

Custom$_____________ enter a dollar amount

Activity-based costing

Standard$_________enter a dollar amount

Custom$____________enter a dollar amount