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 170,000 100 runs Handling materials Pounds of materials used 364,000 130,000 pounds Machine depreciation and maintenance Machine-hours 209,000 11,000 hours Performing quality control Number of inspections 47,600 35 inspections Packing Number of units 147,000 490,000 units Total estimated cost $ 982,600 In addition, management estimated 7,300 direct labor-hours for year 2. Assume that the following cost driver volumes occurred in January year 2: Institutional Standard Silver Number of units produced 58,000 23,000 10,000 Direct materials costs $ 40,000 $ 23,000 $ 16,000 Direct labor-hours 410 470 570 Number of orders 11 8 5 Number of production runs 3 2 6 Pounds of material 16,000 5,000 3,300 Machine-hours 580 150 70 Number of inspections 3 3 3 Units shipped 58,000 23,000 10,000 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. (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 requirement (a)(2). (Round "Indirect costs" to the nearest dollar.) (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.)