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Crane Inc. manufactures and distributes three types of water skis: beginner, intermediate. and advanced. Production is highly automated for the beginner model, whereas the intermediate and advanced models require increasing degrees of labour. depending on the shaping and nishing processes. lCrane applies all indirect costs to production using a single predetermined overhead [0H1 rate based on direct labour hours [DLH]. Management estimates that 36,600 DLH will be used in the upcoming year, at a rate of $17 per hour. Assume that the following activity took place in the rst month of the new year: Number of units produced 24,400 9,000 3,?00 Direct materials costs $25,400 $15,900 $9,300 Direct labour hours 600 1,200 2,400 Number of orders 6 4 3 Number of production runs 2 2 3 Kilograms of material used 9,300 3,900 1,300 Machine hours 1,500 3?0 240 Number of inspections 3 3 3 Number of units shipped 22,000 9,200 3,100 A consultant recently suggested that Crane switch to an activity-based costing system, and assembled the following information: Order processing Number of orders $ 73,000 100 orders Material handling Kilograms of materials used 730,000 146,000 kilograms Machine depreciation and maintenanoe Machine hours 504,000 24,000 hours Quality control Number of inspections 157,000 40 inspections $ 1,464,000 Calculate the production costs for each product in the rst month of the upcoming year, using direct labour hours as the allocation base. Calculate the production costs for each product in the rst month of the upcoming year, using activity-based costing. Labour ' l l Amused : S S Compare your answers in parts {a} and (b). Is the overhead charged to each product the same under each method? The amount charged to each product for overhead is under the two methods