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Coffee Bean Inc. (CBI) processes and distributes a variety of coffee. CBI buys coffee beans from around the world and roasts, blends, and packages them for resale. Currently, the firm offers 15 coffees to gourmet shops in 1-pound bags. The major cost is direct materials; however, a substantial amount of factory overhead is incurred in the predominantly automated roasting and packing process. The company uses relatively little direct labor.

Some of the coffees are very popular and sell in large volumes; a few of the newer brands have very low volumes. CBI prices its coffee at full product cost, including allocated overhead, plus a markup of 30%. If its prices for certain coffees are significantly higher than the market, CBI lowers its prices. The company competes primarily on the quality of its products, but customers are price conscious as well.

Data for the current budget include factory overhead of $3,400,000, which has been allocated on the basis of each products direct labor cost. The budgeted direct labor cost for the current year totals $604,000. The firm budgeted $6,400,000 for purchase and use of direct materials (mostly coffee beans).

The budgeted direct costs for 1-pound bags of two of the companys many products are as follows:

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Direct materials Direct labor Mona Loa $ 4.20 0.30 Malaysian $ 3.20 0.30 CBI's controller, Mona Clin, believes that its current product costing system could be providing misleading cost information. She has developed this analysis of the current year's budgeted factory overhead costs: Activity Purchasing Materials handling Quality control Roasting Blending Packaging Total factory overhead cost Cost Driver Purchase orders Setups Batches Roasting hours Blending hours Packaging hours Budgeted Activity 1,198 1,840 760 96,500 34,000 26,400 Budgeted Cost $ 583,000 724,000 148,000 965,000 340,000 264,000 $ 3,024,000 Data regarding the current year's production of just two of its lines, Mona Loa and Malaysian, follow. There is no beginning or ending direct materials inventory for either of these coffees. Budgeted sales Batch size Setups Purchase order size Roasting time Blending time Packaging time Mona Loa 104,000 pounds 10,400 pounds 3 per batch 25, 400 pounds 1 hour per 100 pounds 0.5 hour per 100 pounds 0.1 hour per 100 pounds Malaysian 2,040 pounds 540 pounds 3 per batch 540 pounds 1 hour per 100 pounds 0.5 hour per 100 pounds 0.1 hour per 100 pounds Required: 1. Using Coffee Bean Inc.'s current product costing system, a. Determine the company's predetermined overhead rate using direct labor cost as the single cost driver. b. Determine the full product costs and selling prices of one pound of Mona Loa coffee and one pound of Malaysian coffee. Required: 1. Using Coffee Bean Inc.'s current product costing system, a. Determine the company's predetermined overhead rate using direct labor cost as the single cost driver. b. Determine the full product costs and selling prices of one pound of Mona Loa coffee and one pound of Malaysian coffee. 2. Using an activity-based costing approach, develop a new product cost for 1 pound of Mona Loa coffee and 1 pound of Malaysian coffee. Allocate all overhead costs to the 104,000 pounds of Mona Loa and the 2,040 pounds of Malaysian. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Using Coffee Bean Inc.'s current product costing system, determine the company's predetermined overhead rate using direct labor cost as the single cost driver. (Round your answer to 2 decimal places.) Predetermined factory overhead rate per direct-labor dollar Req 1a Req 1B Reg 2 Using Coffee Bean Inc.'s current product costing system, determine the full product costs and selling prices of one pound of Mona Loa coffee and one pound of Malaysian coffee. (Round your answers to 2 decimal places.) Mona Loa Malaysian Product costs Budgeted selling price per pound Req 1A Req 1B Req 2 Using an activity-based costing approach, develop a new product cost for 1 pound of Mona Loa coffee and 1 pound of Malaysian coffee. Allocate all overhead costs to the 104,000 pounds of Mona Loa and the 2,040 pounds of Malaysian. (Round intermediate calculations to 2 decimal places.) Mona Loa Coffee Malaysian Coffee Direct unit costs: Direct materials Direct labor Indirect unit costs: Purchasing Material handling Quality control Roasting Blending Packaging Total unit cost

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