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.

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

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 $ 100,000 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. Your answer is incorrect. Determine the difference in allocation between the two approaches. Traditional costing Standard $ Custom $ Activity-based costing Standard $ | Custom $