Exercise 17-1 (Part Level Submission) Saddle Inc. has two typesof handbags: standard and custom. The controller has decided to usea plantwide overhead rate based on direct labor costs. Thepresident has heard of activity-based costing and wants to see howthe results would differ if this system were used. Two activitycost pools were developed: machining and machine setup. Presentedbelow is information related to the company’s operations. StandardCustom Direct labor costs $41,000 $103,000 Machine hours 1,2401,490 Setup hours 109 370 Total estimated overhead costs are$304,000. Overhead cost allocated to the machining activity costpool is $199,000, and $105,000 is allocated to the machine setupactivity cost pool. (a) Your answer is correct. Compute theoverhead rate using the traditional (plantwide) approach. (Roundanswer to 2 decimal places, e.g. 12.25.) Predetermined overheadrate % of direct labor cost Click if you would like to Show Workfor this question: Open Show Work Show Solution Show Answer Link toText Link to Text Attempts: 1 of 3 used (b) Your answer is correct.Compute the overhead rates using the activity-based costingapproach. (Round answers to 2 decimal places, e.g. 12.25.)Machining $ per machine hour Machine setup $ per setup hour Clickif you would like to Show Work for this question: Open Show WorkShow Solution Show Answer Link to Text Link to Text Attempts: 1 of3 used (c) Determine the difference in allocation between the twoapproaches. (Round answers to 0 decimal places, e.g. 1,225.)Traditional costing Standard $ Custom $ Activity-based costingStandard $ Custom $ Click if you would like to Show Work for thisquestion:
