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. Activity Direct Labor Costs Machine Hours. Setup Hours 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. Predetermined Overhead Rate Compute the overhead rate using the traditional (plantwide) approach. Round answer to 2 decimal places, e.g. 12.25. Make sure to calculate the rate in percentage first by multiplying it by 100. Then, round the response in percentage to 2 decimal places. Response Overhead Rate Activity Cost Pools and Drivers Standard $50,000 1.500 Machining Machine Setup Compute the overhead rates using the activity-based costing approach. . When typing your responses, do NOT include a dollar sign. For example, if your answer is $10,000, you should be typing 10,000 or 10,000.00 without any dollar sign. Response Overhead Rate Traditional Costing Standard Custom 90 Custom Activity-Based Costing Standard Custom $100,000 1,500 420 1010 $ $ % of Direct Labor Cost Determine the difference (in costs) in allocation between the two approaches. Round answer to the nearest dollar. IF your calculation is $10.01, enter 10. When typing your responses, do NOT include a dollar sign. For example, if your answer is $10,000, you should be typing 10,000 or 10,000.00 without any dollar sign. per Machine Hour per Setup Hour

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