Wilkins 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	$59,800	$107,000
Machine hours	1,270	1,160
Setup hours	110	430

Total estimated overhead costs are $304,500. Overhead cost allocated to the machining activity cost pool is $195,600, and $108,900is allocated to the machine setup activity cost pool.

(a) Compute the overhead rate using the traditional (plantwide) approach.