College Supply Company (CSC) makes three types of drinking glasses: short, medium, and tall. It presently applies overhead using a predetermined rate based on direct labor-hours. A group of company employees recommended that CSC switch to activity-based costing and identified the following activities, cost drivers, estimated costs, and estimated cost driver units for Year 5 for each activity center. Activity Setting up production Processing orders Recommended Cost Driver Number of orders Estimated Cost Number of production runs $ 32,000 52,800 Handling materials Pounds of materials 14,000 Using machines Machine-hours 72,000 Estimated Cost Driver Units 100 runs 220 orders 7,000 pounds 12,000 hours Providing quality management Number of inspections 48,000 Packing and shipping Units shipped 40,000 40 inspections 20,000 units $258,800 In addition, management estimated 2,000 direct labor-hours for year 5. Assume that the following cost driver volumes occurred in February, year 5. Number of units produced Short 1,000 Medium Tall Direct materials costs $3,000 400 $2,500 500 $2,000 Direct labor-hours 110 120 100 Number of orders 8 9 3 Number of production runs 1 4 9 Pounds of material 300 800 200 Machine-hours 600 300 300 Number of inspections 2 Units shipped 1,000 2 400 2 400 Direct labor costs were $22 per hour. Required: a. Compute a predetermined overhead rate for year 5 for each cost driver recommended by the employees. Also compute a predetermined rate using direct labor-hours as the allocation base. b. Compute the production costs for each product for February using direct labor-hours as the allocation base and the predetermined rate computed in requirement a. c. Compute the production costs for each product for February using the cost drivers recommended by the employees and the predetermined rates computed in requirement a. (Note: Do not assume that total overhead applied to products in February will be the same for activity-based costing as it was for the labor-hour-based allocation.)