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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.

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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 $50,000 Custom $100,000 Direct labor costs Machine hours Setup hours 1.200 1,500 120 360 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. (a) Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, eg. 12.25.) Predetermined overhead rate % of direct labor cost Save for Later Attempts:0 of 1 used Submit

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