Question 33 Wet Ride 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 finishing processes. Wet Ride applies all indirect costs to production using a single predetermined overhead (OH) rate based on direct labour hours (DLH) Management estimates that 33,000 direct labour hours will be used in the upcoming year, at a rate of $17 per hour Assume that the following activity took place in the first month of the new year: Beginner Intermediate Advanced 3,300 $8,800 2,200 Number of units produced Direct material costs Direct labour hours Number of orders Number of production runs Kilograms of material used Machine hours Number of inspections Number of units shipped 22,000 $22,900 600 6 2 8,800 1,300 8,800 $14,300 1,100 4 2 3,500 330 1,700 220 19,800 8,300 2,800 A consultant recently suggested that Wet Ride switch to an activity-based costing system, and assembled the following information: Activities Order processing Materials handling Machine depreciation and maintenance Machine hours Recommended Cost Drivers Number of orders Kilograms of materials used Estimated OH Cost Cost Drivers 100 orders 132,000 kilograms $66,000 660,000 462,000 132,000 $1.320,000 22,000 hours uality control Number of inspections 40 inspections