Check my work 5 Enter your search term Coffee Bean Incorporated (CBI) processes and distributes high-quality coffee. CBI buys coffee beans from around the world and roasts, blends, and packages them for resale. Currently, the firm offers 2 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. 7 points Skipped CBI prices its coffee at full product cost, including allocated overhead, plus a markup of 30%. If its prices 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. eBook Data for the current budget include factory overhead of $3,000,000, which has been allocated on the basis of each product's direct labor cost. The budgeted direct labor cost for the current year totals $600,000. The firm budgeted $6,000,000 for purchase and use of direct materials (mostly coffee beans). Ask Print The budgeted direct costs for 1-pound bags are as follows: References 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 Driver Consumption 1,158 1,800 720 96,100 33,600 26,000 Budgeted Cost $ 579,000 720,000 144,000 961,000 336,000 260,000 $ 3,000,000 Total factory overhead cost Enter your search term 000,000 Data regarding the current year's production for the Mona Loa and Malaysian lines follow. There is no beginning or ending direct materials inventory for either of these coffees. 7 points Skipped Budgeted sales Batch size Setups Purchase order size Roasting time Blending time Packaging time Mona Loa 100,000 pounds 10,000 pounds 3 per batch 25,000 pounds 1 hour per 100 pounds 0.5 hour per 100 pounds 0.1 hour per 100 pounds Malaysian 2,000 pounds 500 pounds 3 per batch 500 pounds 1 hour per 100 pounds 0.5 hour per 100 pounds 0.1 hour per 100 pounds eBook Ask Print Coffee Bean has total practical capacity as noted in the table below, i.e. processing 1,400 purchase orders, 2,400 setups, etc. These are the levels of activity work that are sustainable. References Activity Purchasing Materials handling Quality control Roasting Blending Packaging Practical Capacity 1,400 2,400 1,200 100,000 36,000 30,000 Required: 1. Determine the activity rates based on practical capacity and the cost of idle capacity for each activity. (Round "Usage %" and "Practical Capactity Rate" to 2 decimal places. For percentages.1234 = 12.34%.) Activity Budgeted Activity Budgeted Cost Usage Based Rate Practical Capacity at Current Spending Usage % Practical Capacity Rate Unused Capacity Idle Capacity Cost
