Carla Vista 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. Carla Vista 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. Carla Vista 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 $3.2 million, which has been allocated in the existing costing system based on each products budgeted direct labour cost. The budgeted direct labour cost for 2022 totals $640,000. Purchases and use of materials (mostly coffee beans) are budgeted to total $5 million. The budgeted prime costs for 500-gram bags of two of the companys 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.

Carla Vistas 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:

a. Calculate the companys 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.)

b. Use the controller's activity-based approach to estimate the 2020 budgeted cost for one kilogram of Mocha coffee and one kilogram of Vanilla coffee.

Direct materials Direct labour Mocha $3.20 $0.25 Vanilla $2.80 $0.25 Expected sales Batch size Set-ups Purchase order size Roasting time Blending time Packaging time Mocha 50,000 kilograms 50,000 kilograms 3 per batch 12,500 kilograms 1 hour/50 kg 0.50 hour/50 kg 0.10 hour/50 kg 1,000 250 3 250 Vanilla kilograms kilograms per batch kilograms hour/50 kg hour/50 kg hour/50 kg 1.00 0.50 0.10 Activity Pools Cost Drivers Budgeted Cost Purchasing Material handling Quality control Roasting Blending Packaging Total manufacturing overhead cost Purchase orders Set-ups Batches Roasting hours Blending hours Packaging hours Budgeted Units 1,100 1,600 500 90,000 20,800 27,000 $ 522,500 552,000 140,000 900,000 416,000 675,000 $ 3,205,500 Overhead rate % of direct labour cost Mocha Vanilla Selling price $ $