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 $ 47,000 228, eee 242, eee Estimated cost Driver Activity 289 orders 120 runs 110,000 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 260,000 46,200 120, eee $943,200 13,000 hours 35 inspections 480,000 units In addition, management estimated 7,200 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, eee 26,00 9,000 Direct materials costs $38,800 $21,800 $15,000 Direct labor-hours 480 570 Number of orders 11 le 5 Number of production runs 2 3 7 Pounds of material 16,000 5, ee 3,5ec Machine-hours 560 14e 6e Number of inspections 4 3 3 Units shipped 58,000 26, eee 9, eee 430 Actual labor costs were $14 per hour. wcu Required: Help Save & Exit Subm 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. Req A1 Req A2 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.) 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 D. c. Compute the production costs for each product for January using the cost drivers recommended by the consultant predetermined rates computed in requirement a. (Note: Do not assume that total overhead applied to products in Jan 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 Red B 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. Req A1 Reg A2 Req 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.) Account Institutional Standard Silver Total Direct materials $ 38,000 $ 21,000 $ 15,000 $ 74,000 Direct labor Indirect costs Total cost Mc Graw Complete this question by entering your answers in the tabs below. se Reg A1 Req A2 ReqB Reqc points eBook 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 References Institutional Standard $ 38,000 $ 21,000 $ Silver 15,000 $ Total 74,000 Account Direct materials Direct labor Indirect costs Processing orders Setting up production Handling materials Using machines Performing quality control Packing Total cost 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 $ 47,000 228, eee 242, eee Estimated cost Driver Activity 289 orders 120 runs 110,000 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 260,000 46,200 120, eee $943,200 13,000 hours 35 inspections 480,000 units In addition, management estimated 7,200 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, eee 26,00 9,000 Direct materials costs $38,800 $21,800 $15,000 Direct labor-hours 480 570 Number of orders 11 le 5 Number of production runs 2 3 7 Pounds of material 16,000 5, ee 3,5ec Machine-hours 560 14e 6e Number of inspections 4 3 3 Units shipped 58,000 26, eee 9, eee 430 Actual labor costs were $14 per hour. wcu Required: Help Save & Exit Subm 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. Req A1 Req A2 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.) 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 D. c. Compute the production costs for each product for January using the cost drivers recommended by the consultant predetermined rates computed in requirement a. (Note: Do not assume that total overhead applied to products in Jan 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 Red B 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. Req A1 Reg A2 Req 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.) Account Institutional Standard Silver Total Direct materials $ 38,000 $ 21,000 $ 15,000 $ 74,000 Direct labor Indirect costs Total cost Mc Graw Complete this question by entering your answers in the tabs below. se Reg A1 Req A2 ReqB Reqc points eBook 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 References Institutional Standard $ 38,000 $ 21,000 $ Silver 15,000 $ Total 74,000 Account Direct materials Direct labor Indirect costs Processing orders Setting up production Handling materials Using machines Performing quality control Packing Total cost