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

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 1,200 1,200 Setup hours 120 390 Total estimated overhead costs are $299.100. Overhead cost allocated to the machining activity cost pool is $192,000, and S 107 100 is allocated to the machine setup activity cost pool Molunawer correct compute the overhead rate using the traditional (plantwide) approach (Round answer to 2 decimal places 12.25.) Predetermined overhead rate 199.40 9 of direct labor cost Attempts: 1 of 1 used Determine the difference in allocation between two approaches Traditional costing Standard Activity based costing Standard Total Estimated overead costs= $299,100 Estimated direct labor cost of Standard = $50,000 Estimated direct labor cost of Custom = $100,000 Total estimated direct labor costs= Estimated direct labor cost of Standard+ Estimated direct labor cost of Custom = $50,000+$100,000 = $150,000 Predetermined overhead rate = Total Estimated overead costs/ Total estimated direct labor costs = $299,100/$150,000 = 199.40% of direct labor cost Predetermined overhead rate 199.40% of