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 Estimated Cost $ 45,000 2ee, eee 336, eee Estimated Cost Driver Activity 200 orders 100 runs 120,890 pounds Activity Processing orders Setting up production Handling materials Machine depreciation and maintenance Performing quality control Packing Total estimated cost Machine-hours Number of inspections Number of units 220,000 69,850 153,000 $1,023,850 11,000 hours 55 inspections 510, eee units In addition, management estimated 7100 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 Number of production runs Pounds of material Machine-hours Number of inspections Units shipped Institutional 56,000 $39, eee 460 10 3 16, eee 580 3 56,000 Standard 24,000 524, 420 11 3 6.ece 130 3 24, eee Silver 10, eee $18,000 640 7 7 3,100 80 3 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. (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) institucional 56, eee $39, eee 460 10 Silver 19.000 $18,000 640 7 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 Standara 24, eee $24,000 420 11 3 6,000 130 3 24, eee 16, eee 580 3 56,eee 3,1ee 80 3 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 (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.) Complete this question by entering your answers in the tabs below. Reg A1 Reg AZ Req B Reqc 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.) Rate per order Activity Processing orders Setting up production Handling materials Using machines Performing quality control Packing per run per pound per machine hour per inspection per unit Reg A2 > Complete this question by entering your answers in the tabs below. Reg A1 Reo A2 Req B Reg C Compute a predetermined rate for year 2 using direct labor-hours as the allocation base. (Round your answer to 2 decimal places.) Predetermined rate per direct labor-hour Reg A1 Reg A2 Reg B Reqc 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). (Do not round intermediate calculations.) Institutional Standard 39,000 $ 24,000 $ Silver 18,000 $ Total 81,000 Account Direct materials Direct labor Indirect costs Total cost Reg A1 Reg A2 Req B Reqc 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.) (Do not round intermediate calculations.) Show less Account Direct materials Direct labor Institutional Standard $ 39,000 $ 24,000 $ Silver 18,000 $ Total 81,000 indirect costs Processing orders Setting up production Handling materials Using machines Performing quality control Packing Total cost