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		$ 50,000		$ 100,000
Machine hours		1,500		1,200
Setup hours		90		390

Total estimated overhead costs are $ 294,600. Overhead cost allocated to the machining activity cost pool is $ 189,000, and $ 105,600 is allocated to the machine setup activity cost pool.

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

Predetermined overhead rate

enter the overhead rate as percentage of direct labor cost rounded to 2 decimal places

% of direct labor cost