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.

	Standards	Custom
Direct labor costs	45,000	113,000
Machine hours	1140	1110
Setup hours	106	430

Total estimated overhead costs are $308,000. Overhead cost allocated to the machine activity cost pool is 195,000 and 113,000 is allocated to the machine setup activity cost pool.

compute the overhead rate using the traditional(plant wide) approach

Predetermined overhead rate _____% of overhead labor cost

compute the difference in allocation between the two approaches

traditional costing

standard $______ custom $_____

Activity based costing

Standard $____ Custom $_____