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 materials used Estimated Cost $ 48,000 152,000 308,000 Estimated Cost Driver Activity 200 orders 80 runs 140,000 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 240,000 65,000 90,000 $903,000 12,000 hours 50 inspections 450,000 units 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 57,000 $37,000 450 12 3 14,000 590 3 57,000 Standard 24,000 $23,000 460 10 3 6,000 160 4 24,000 Silver 8,000 $15,000 560 7 6 3,200 70 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.) Complete this question by entering your answers in the tabs below. Reg A1 Reg A2 Reg 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.) Activity Processing orders Setting up production Handling materials Using machines Performing quality control Packing Rate per order per run per pound per machine hour per inspection per unit Complete this question by entering your answers in the tabs below. Req A1 Reg A2 ReqB Reqc 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 Complete this question by entering your answers in the tabs below. 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 $ 37,000 $ 23,000 $ Silver 15,000 $ Account Direct materials Direct labor Indirect costs Total cost Total 75,000 0 0 $ 37,000 $ 23,000 $ 15,000 $ 75,000 Complete this question by entering your answers in the tabs below. Reg A1 Reg A2 Reg 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 Institutional Standard $ 37,000 $ 23,000 $ Silver 15,000 $ Total 75,000 0 0 Account Direct materials Direct labor Indirect costs Processing orders Setting up production Handling materials Using machines Performing quality control Packing Total cost 0 0 0 0 0 $ 37,000 EA $ 23,000 $ 15,000 $ 75,000