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 Processing orders Setting up production Handling materials. Machine depreciation and maintenance Performing quality control Packing Total estimated cost Number of orders Number of production runs Pounds of materials used Machine-hours Number of inspections Number of units Estimated Cost Driver Activity 200 orders Estimated Cost $ 45,000 170,000 275,000 100 runs 110,000 pounds 280,000 14,000 hours 63,500 50 inspections 88,000 $921,500 440,000 units In addition, management estimated 7,500 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 63,000 26,000 Direct materials costs $36,000 $26,000 8,000 $17,000 Direct labor-hours 460 400 610 Number of orders 10 11 6 Number of production runs 3 3 6 Pounds of material 13,000 6,000 2,600 Machine-hours 600 130 90 Number of inspections 3 2 3 Units shipped 63,000 26,000 8,000 Actual labor costs were $14 per hour.