Coffee Bean, Inc. (CBI), is a processor and distributor of a variety of blends of coffee. The company buys coffee beans from around the world and roasts, blends, and packages them for resale. CBI offers a large variety of different coffees that it sells to gourmet shops in one-pound bags. The major cost of the coffee is raw materials. However, the company's predominantly automated roasting, blending, and packing processes require a substantial amount of manufacturing overhead. The company uses relatively little direct labor. Some of CBI's coffees are very popular and sell in large volumes, while a few of the newer blends sell in very low volumes. For the coming year, CBI's budget Includes estimated manufacturing overhead cost of $3,224.000. CBI assigns manufacturing overhead to products on the basis of direct labor-hours. The expected direct labor cost totals $728,000, which represents 52,000 hours of direct labor time. The expected costs for direct materials and direct labor for one-pound bags of two of the company's coffee products appear below. Mona Loa Malaysian Direct materials $ 4.40 $ 3.40 Direct labor (0.025 hours per bag) $ 0.35 $ 0.35 cals controller belleves that the company's traditional costing system may be providing misleading cost information. To determine whether or not this is correct, the controller has prepared an analysis of the year's expected manufacturing overhead costs, as shown in the following table: Expected Activity for Expected cost Activity Cost Pool Activity Measure the Year for the Year Purchasing Purchase orders 1,730 orders $ 553,600 Material handling Number of setups 1,820 setups 764,400 Quality control Number of batches 620 batches 161,200 Roasting Roasting hours 96,300 roasting hours 1,155,600 Blending Blending hours 33,700 blending hours 337,000 Packaging Packaging hours 25, 220 packaging hours 252,200 Total manufacturing overhead cost $3,224,000 Help Save & Exit Data regarding the expected production of Mona Loa and Malaysian coffee are presented below. There will be no raw materials inventory for either of these coffees at the beginning of the year, Mona Loa Malaysian Expected sales 110,000 pounds 1,600 pounds Batch size 11,800 pounds 400 pounds Setups 2 per batch 2 per batch Purchase order size 22,000 pounds 400 pounds Roasting time per 100 pounds 1 roasting hours 1 roasting hours Blending time per 100 pounds 8.5 blending hours 0.5 blending hours Packaging time per 100 pounds 0.1 packaging hours 0.1 packaging hours Required: 1. Using direct labor-hours as the base for assigning manufacturing overhead cost to products, do the following: a. Determine the predetermined overhead rate that will be used during the year. b. Determine the unit product cost of one pound of the Mona Loa coffee and one pound of the Malaysian coffee. 2. Using activity-based costing as the basis for assigning manufacturing overhead cost to products, do the following: a. Determine the total amount of manufacturing overhead cost assigned to the Mona Loa coffee and to the Malaysian coffee fort year. b. Using the data developed in part (2a) above, compute the amount of manufacturing overhead cost per pound of the Mona Loa coffee and the Malaysian coffee. c. Determine the unit product cost of one pound of the Mona Loa coffee and one pound of the Malaysian coffee. Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 2A Req 28 Req 2c Using direct labor-hours as the base for assigning manufacturing overhead cost to products, determine the predetermined overhead rate that will be used during the year. Predetermined overhead rate 62 per DLH Reg 10 > Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 28 Req 2c Using direct labor-hours as the base for assigning manufacturing overhead cost to products, determine the unit product cost of one pound of the Mona Loa coffee and one pound of the Malaysian coffee. (Do not round Intermediate calculations. Round your answers to 2 decimal places.) Total unit product cost Mona Loa Malaysian s 6.305 5.30 Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2A Reg 2B Reg 2C Using activity-based costing as the basis for assigning manufacturing overhead cost to products, determine the total amount of manufacturing overhead cost assigned to the Mona Loa coffee and to the Malaysian coffee for the year. (Do not round Intermediate calculations. Round your answers to the nearest dollar amount.) Mona Loa Malaysian Total manufacturing overhead cost Complete this question by entering your answers in the tabs below. Reg 1A Reg 18 Req 2A Req 2B Reg 2C Using activity-based costing as the basis for assigning manufacturing overhead cost to products, compute the amount of manufacturing overhead cost per pound of the Mona Loa coffee and the Malaysian coffee. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Mona Loa Malaysian Manufacturing overhead cost per pound Complete this question by entering your answers in the tabs below. Req LA Req 18 Reg 2A Reg 28 Req 2c Using activity-based costing as the basis for assigning manufacturing overhead cost to products, determine the unit product cost of one pound of the Mona Loa coffee and one pound of the Malaysian coffee. (Do not round intermediate calculations, Round your answers to 2 decimal places.) Mona Loa Malaysian Total unit product cost
