6 30 points Problem 5-42 (Algo) Volume-Based Costing versus ABC [LO 5-2,5-3] Coffee Bean Incorporated (CB) 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 $2,994,000, which has been allocated on the basis of each product's direct labor cost. The budgeted direct labor cost for the current year totals $599,000. The firm budgeted $5,900,000 for purchase and use of direct materials (mostly coffee beans) The budgeted direct costs for 1-pound bags of two of the company's many products are as follows: Direct materials Direct labor Nona Loa Malaysian $ 3.20 0.30 $4.20 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 Coat Driver Purchase orders Budgeted Driver Consumption Budgeted Cost 1,148 $570,000 Setupa 1,790 719,000 Quality control Batches 710 143,000 Roasting Roasting hours 96,000 960,000 Blending Blending hours 33,500 335,000 Packaging Packaging hours 25,900 259,000 Total factory overhead cost $ 2,994,000 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 Setupa Purchase order size Roasting time Blending time Packaging time Required: Mona Loa 100,100 pounds 9,900 pounds 3 per batch 24,100 pounds 1 hour per 100 pounds 0.5 hour per 100 pounds 0.1 hour per 100 pounds Malaysian 1,990 pounds 490 pounds 3 per batch 490 pounds 1 hour per 100 pounds 0.5 hour per 100 pounds 0.1 hour per 100 pounds 1. Using Coffee Bean Incorporated'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 100,100 pounds of Mona Loa and the 1,990 pounds of Malaysian. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. 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 100,100 pounds of Mona Loa and the 1,990 pounds of Malaysian. (Round intermediate calculations to 2 decimal places.) Direct unit costs Mona Loa Coffee Malaysian Coffee Direct materials 4.20 Direct labor Indirect unit costs 0.30 $ 4.50 3.20 0.30 $ 3.50 Purchasing Material handling Quality control Roasting 2,024.00 12,182.83 2,036.24 10.010.00 Blending 5,005.00 Packaging 1,001.00 Total unit cost 32.263.67 2,044.00 4,892.41 x 817.72 194.00 x 99.50 19.01 $8,070.14