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Blossom Inc. is a distributor and processor of a variety of different blends of coffee. The company buys coffee beans from around the world and
Blossom Inc. is a distributor and processor of a variety of different blends of coffee. The company buys coffee beans from around the world and roasts, blends, and packages them for resale. Blossom Inc. currently offers 10 different coffees in 500 -gram bags to gourmet shops. The major cost is raw materials; however, there is a substantial amount of manufacturing overhead in the mostly automated roasting and packing process. The company uses relatively little direct labour. Some of the coffees are very popular and sell in large volumes, while a few of the newer blends have very low volumes. Blossom Inc. prices its coffee at total product costs, including allocated overhead, plus a markup of 25%. If prices for certain coffees are significantly higher than market, the prices are adjusted lower. Data for the 2022 budget include manufacturing overhead of $3.4 million, which has been allocated in the existing costing system based on each product's budgeted direct labour cost. The budgeted direct labour cost for 2022 totals $680,000. Purchases and use of materials (mostly coffee beans) are budgeted to total $6 million. The budgeted prime costs for 500-gram bags of two of the company's products are as follows: Data for the 2022 production of Mocha and Vanilla coffee are as follows. There will be no beginning or ending materials inventory for either of these coffees. Blossom's controller believes the traditional costing system may be providing misleading cost information. He has developed an activity-based analysis of the 2022 budgeted manufacturing overhead costs shown in the following table: Calculate the company's 2022 budgeted manufacturing overhead rate using direct labour costs as the single rate and the 2022 budgeted costs and selling prices of 500 grams of Mocha coffee and 500 grams of Vanilla coffee. (Round intermediate calculations and final answers to 2 decimal places, e.g. 15.25.) Use the controller's activity-based approach to estimate the 2022 budgeted cost for one kilogram of Mocha coffee and one kilogram of Vanilla coffee. (Round intermediate calculations and final answers to 3 decimal places, e.g. 15.258.) Blossom Inc. is a distributor and processor of a variety of different blends of coffee. The company buys coffee beans from around the world and roasts, blends, and packages them for resale. Blossom Inc. currently offers 10 different coffees in 500 -gram bags to gourmet shops. The major cost is raw materials; however, there is a substantial amount of manufacturing overhead in the mostly automated roasting and packing process. The company uses relatively little direct labour. Some of the coffees are very popular and sell in large volumes, while a few of the newer blends have very low volumes. Blossom Inc. prices its coffee at total product costs, including allocated overhead, plus a markup of 25%. If prices for certain coffees are significantly higher than market, the prices are adjusted lower. Data for the 2022 budget include manufacturing overhead of $3.4 million, which has been allocated in the existing costing system based on each product's budgeted direct labour cost. The budgeted direct labour cost for 2022 totals $680,000. Purchases and use of materials (mostly coffee beans) are budgeted to total $6 million. The budgeted prime costs for 500-gram bags of two of the company's products are as follows: Data for the 2022 production of Mocha and Vanilla coffee are as follows. There will be no beginning or ending materials inventory for either of these coffees. Blossom's controller believes the traditional costing system may be providing misleading cost information. He has developed an activity-based analysis of the 2022 budgeted manufacturing overhead costs shown in the following table: Calculate the company's 2022 budgeted manufacturing overhead rate using direct labour costs as the single rate and the 2022 budgeted costs and selling prices of 500 grams of Mocha coffee and 500 grams of Vanilla coffee. (Round intermediate calculations and final answers to 2 decimal places, e.g. 15.25.) Use the controller's activity-based approach to estimate the 2022 budgeted cost for one kilogram of Mocha coffee and one kilogram of Vanilla coffee. (Round intermediate calculations and final answers to 3 decimal places, e.g. 15.258.)
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