Exercise 4-1 (Part Level Submission) Saddle Inc, has two types of handbagos: 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 Machine hours Setup hours $41,000 1,240 109 $103,000 1,490 370 Total estimated overhead costs are $304,000. Overhead cost allocated to the machining activity cost pool is $199,000, and $105,000 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, e.g. 12.25.) Predetermined overhead rate % of direct labor cost VIDEO: STMILAR EXERCISE