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 1,200 1,500 Setup hours 120 360 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 correct. Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25.) Predetermined overhead rate 196.4 % of direct labor cost Attempts: 1 of 7 used Your answer is correct. Compute the overhead rates using the activity-based costing approach. Machining 70 per machine hour Machine setup $ 220 per setup hour Attempts: 1 of 7 used Your answer is incorrect. Determine the difference in allocation between the two approaches. Traditional costing Standard A Custom A Activity-based costing Standard Custom Save for Later Last saved 1 second ago. Attempts: 1 of 7 used Submit