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Kitchen Supply, Inc. (KSI), manufactures three types of flatware: Institutional, standard, and silver. It apples 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 Reconmended Estimated Estisated Cost Activity Processing orders Setting up production Handling materials Machine depreciation and Cast Driver Cost Driver Activity $ 44,000 Number of orders 280 orders Number of production runs 80 runs 128,000 Pounds of materials used 110,e00 pounds 220,000 maintenance Machine-hours 220,000 67,see 112,s8e 11,e8e hours se inspections Perforsing quality control Packing Number of inspections Number of units 45e, eee units Total estisated cost $792,08e In addition, management estimated 7,500 direct labor-hours for year 2 Assume that the following cost driver volumes occurred in January, year 2 Institutional 61,eee $41,000 Standard Silver Number of units produced Direct saterials costs 27, e0e $26,000 10,000 $17,000 Direct labor-hours 57e 45e 45e 6 1e Number of orders 7 Number of production runs Pounds of material 2 6,e00 3,see 17,000 80 600 140 Machine-hours 21 3 Number of inspections 1e, eee 61,000 27,000 Units shipped Actual labor costs were $15 per hour Actual labor costs were $15 per hour. Required: a. () 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 e(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 Req C 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 Rate Processing orders per order Setting up production per run per pound Handling materials per machine hour Using machines Performing quality control per inspection Packing per unit Req A2 Actual labor costs were $15 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 e(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 Req C 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 Req A1 Req B Actual labor costs were $15 per hour Required: 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 usting direct labor-hours as the allocation base and the predetermined rate computed in requirement e(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 appliled 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 Req 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.) Account Institutional Standard Silver Total 20,000 S Direct materials 17,000 84,000 41,000 Direct labor Indirect costs Total cost Req A2 Req C 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 Req 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.) (Do not round intermediate calculations.) Show less & Account Institutional Standard Silver Total Direct materials 26,000 17.000 41.000 84.000 Direct labor Indirect costs Processing orders Setting up production Handling materials Using machines Performing quality control Packing Total cost Req B

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