I am having trouble understanding how to compute question like this, please help.

Kitchen Supply, Inc. (KSI), manufactures three types of flatware: institutional, standard, and silver. It applies all indirect costs according to a predetermined rate based on direct labor-hours. A consultant recently suggested that the company switch to an activity-based costing system and prepared the following cost estimates for year 2 for the recommended cost drivers.

Activity Recommended Cost Driver Estimated Cost Estimated Cost Driver Activity

Processing orders Number of orders $45,000 200 Orders

Setting up production Number of production runs $228,000 120 runs

Handling materials Pounds of material used $364,000 130,000 pounds

Machine depreciation & Maintenance Machine-hours $228,000 12,000 hours

Performing quality control Number of inspections $68,500 50 inspections

Packing Number of units $120,000 480,000 units

Total estimated cost $1,053,500

In addition, management estimated 7,500 direct labor-hours for year 2.

Assume that the following cost driver volume occurred in January, year 2:

Institutional Standard Silver

Number of units produced 64,000 26,000 10,000

Direct materials costs $41,000 $28,000 $16,000

Direct labor-hours 430 430 570

Number of orders 11 11 6

Number of production runs 3 2 7

Pounds of material 16,000 5,000 3,000

Machine-hours 560 140 80

Number of inspections 3 3 2

Units Shipped 64,000 26,000 10,000

Actual labor costs were $14 per hour.

Required:

a.

(1)Compute a predetermined overhead rate for year 2 for each cost driver using the estimated costs and estimated cost driver units prepared by the consultant.(Round your answers to 2 decimal places.)

(2)Compute a predetermined rate for year 2 using direct labor-hours as the allocation base.(Round your answer to 2 decimal places.)

b.Compute the production costs for each product for January using direct labor-hours as the allocation base and the predetermined rate computed in requirementa(2).(Do not round intermediate calculations.)

c.Compute the production costs for each product for January using the cost drivers recommended by the consultant and the predetermined rates computed in requirementa. (Note:Do not assume that total overhead applied to products in January will be the same for activity-based costing as it was for the labor-hour-based allocation.)(Do not round intermediate calculations.)