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. Recommended Cost Driver Number of orders Number of production runs Pounds of materials used Machine-hours Number of inspections Number of units Estimated Cost $ 48,000 187,000 280,000 Activity Processing orders Setting up production Handling materials Machine depreciation and maintenance Performing quality control Packing Total estimated cost Estimated cost Driver Activity 200 orders 110 runs 100,000 pounds 13,000 hours 40 inspections 480,000 units 247,000 51,200 120,000 $933,200 In addition, management estimated 7,700 direct labor-hours for year 2. Assume that the following cost driver volumes occurred in January, year 2. Number of units produced Direct materials costs Direct labor-hours Number of orders Number of production runs Pounds of material Machine-hours Number of inspections Units shipped Institutional 63,000 $38,000 490 12 4 16,000 600 2 63,000 Standard 23,000 $24,000 430 10 2 6,000 120 3 23,000 Silver 8,000 $12,000 650 6 7 2,700 60 4 8,000 Actual labor costs were $15 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. (2) Compute a predetermined rate for year 2 using direct labor-hours as the allocation base. b. Compute the production costs for each product for January using direct labor-hours as the allocation base and the predetermined rate computed In requirement a(2). C. Compute the production costs for each product for January using the cost drivers recommended by the consultant and the predetermined rates computed in requirement a. (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.)