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 the recommended cost drivers. Activity Processing orders Recommended Cost Driver 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 120 runs 110,000 pounds Estimated Cost $ 47,000 216,000 275,000 273,000 13,000 hours 55,200 40 inspections 115,000 460,000 units $981,200 Number of units produced In addition, management estimated 7,900 direct labor-hours. Assume that the following cost driver volumes occurred in January: Silver 10,000 Institutional Standard 60,000 Direct materials costs $38,000 24,000 $26,000 $14,000 Direct labor-hours 480 490 600 Number of orders 13 10 6 Number of production runs 4 2 6 Pounds of material 15,000 Machine-hours Number of inspections 570 3 7,000 150 3 3,300 90 2 Units shipped 60,000 24,000 10,000 Actual labor costs were $16 per hour. Required: a. (1) Compute an activity rate for each cost driver using the estimated costs and estimated cost driver units prepared by the consultant. (2) Compute a predetermined plant-wide overhead rate under the traditional costing system using direct labor-hours as the allocation base. b. Compute the total production costs for each product for January using the traditional costing system with direct labor-hours as the allocation base and the predetermined rate computed in requirement a(2).