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 Processing orders Setting up production Handling materials Machine depreciation and maintenance Performing quality control Packing Total estimated cost. Recommended Cost Driver 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 80 runs Estimated Cost $ 46,000 160,000 220,000 100,000 pounds 252,000 12,000 hours 59,400 45 inspections 130,000 $20,000 units $867,400 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 Number of units produced 64,000 26,000 Direct materials costs $37,000 $27,000 Silver 11,000 $13,000 Direct labor-hours 490 490 590 Number of orders 12 10 5 Number of production runst 3 4 6 Pounds of material 13,000 6,000 3,000 Machine-hours Number of inspections 610 3 130 3 60 2 Units shipped 64,000 26,000 11,000 Actual labor costs were $16 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 vear 2 using direct labor-hours as the allocation base.