Assume there is no beginning raw material inventory and an activity-based costing system is used. Answer the following two questions.

1. What is a product cost for one pound of Brazil coffee?

2. What is a product cost for one pound of Indonesia coffee?

Tyler Coffee Roasters (TCR) processes coffee beans and sells 5 different coffees to wholesalers in one-pound bags. TCR's coffee prices are set at full product cost plus a markup of 40 percent. TCR's 2019 budget information is presented below: Manufacturing overhead: $3,000,000 (allocated on the basis of each product's direct- labor cost) Direct-labor cost: $600,000 Purchases and use of raw materials (mostly coffee beans): $6,000,000 The following table includes the expected costs for two different products. Brazil Coffee Indonesia Coffee Direct Material $3.20 $4.20 Direct labor .30 30 Christina Sands, TCR's controller, believes the job-order costing system might present inaccurate cost information and, thus, has developed an analysis of the 2019 budgeted manufacturing-overhead costs based on activities. Activity Purchasing Material handling Quality control Roasting Blending Packaging Total manufacturing-overhead cost Cost Driver Budgeted Activity Budgeted Cost Purchase orders 1,158 $ 579,000 Setups 1,800 720,000 Batches 720 144,000 Roasting hours 96,100 961,000 Blending hours 33,600 336,000 Packaging hours 26,000 260,000 $3,000,000 The following table displays the 2019 production. Budgeted sales Batch size Setups Purchase order size Roasting time Blending time Packaging time Brazil Coffee Indonesia Coffee 2,000 lb. 100,000 lb. 500 lb. 10,000 lb. 3 per batch 3 per batch 500 lb. 25,000 lb. 5 hr. per 100 lb. 5 hr. per 100 lb. .5 hr. per 100 lb..5 hr. per 100 lb. .2 hr. per 100 lb..2 hr. per 100 lb