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 Estinated Cost S49,00 144,000 220,00 Estimated cost Driver Activity 209 orders 80 runs 100.0 pounds Machine-hours Number of inspections Number of units 240,000 62,180 125.000 $840,100 12.00 hours 45 Inspections se.000 units In addition, management estimated 7700 direct labot-hours for year 2 Assume that the following cost driver volumes occurred in January, year 2 Institutional 56,000 $38,000 460 11 Standard 20.000 $21,000 Silver 10,000 $18,000 430 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 SOS 16.000 7.aa 20. Actual labor costs were $14 per hour. Required: (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 (2) 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 Al R eq AZ Reg Reg Computer predetermined overhead rate for year for each cost driver using the estimated costs and estimated cost deliver units prepared by the consultant, (Round your answers to 2 decimal places.) Rate Activity Processing orders Setting up produchon Handling materials 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 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 Req A2 > 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 AI Reg C 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 38,000 Standard $ 21,000 Silver 18,000 5 Total 77.000 s Account Direct material Direct labor Indirect costs Total cost SEE Reg A1 Req AZ Reg B 12 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 lanuary wil be the same for activity-based costing as it was for the labor-hour-based allocation.) (Do not round Intermediate calculations.) Show less for the labor-hour harder that total overhead applied to consultant and the Institutional 38,000 Standard $ 21,000 $ Silver 18,000 $ Total 77,000 Account Direct materials Direct labor Indirect costs Processing orders:35 Setting up production Handling materials: Using machines 5555 Performing quality control Packing Total cost1282
