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		1,500
Setup hours		90		420

Total estimated overhead costs are $306,900. Overhead cost allocated to the machining activity cost pool is $210,000, and $96,900 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

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

Machining		$enter a dollar amount per machine hour	per machine hour
Machine setup		$enter a dollar amount per setup hour	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

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 1.500 Setup hours 90 420 Tot estimated overhead costs are 5.306.900 Overhead cost allocated to the machining activity cost poolis 5210,000 and 59,900 allocated to the machine setup activity cost pool (a) x Your awer is incorrect Compute the overhead rate using the traditional plantwide) aporeach(ound answer to 2 decimal places 12.25) Predetermined overhead rate of direct labor cost Your answer is partially correct. Compute the overhead rates using the activity based costing approach Machining 70 per machine hour Machine setup $ persetup hour eTextbook and Media Assistance Used Attempt 2 of 3 used Submit Anwar (c) Determine the difference in allocation between the two proches Traditional costing Standard Custom (c) Determine the difference in allocation between the two lipproaches Traditional.costine Standard Custom 5 Marity based costine Standard 3 Custom Textbook and Me And Attempt of