Coffee Bean Incorporated (CBI) processes and distributes a variety of coffee. CBI buys coffee beans from around the world and roasts, blends, and packages them for resale. Currently, the firm offers 15 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.

Some of the coffees are very popular and sell in large volumes; a few of the newer brands have very low volumes. CBI prices its coffee at full product cost, including allocated overhead, plus a markup of 30%. If its prices for certain coffees 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.

Data for the current budget include factory overhead of $2,946,000, which has been allocated on the basis of each products direct labor cost. The budgeted direct labor cost for the current year totals $591,000. The firm budgeted $5,100,000 for purchase and use of direct materials (mostly coffee beans).

The budgeted direct costs for 1-pound bags of two of the companys many products are as follows:

	Mona Loa	Malaysian
Direct materials	$ 4.20	$ 3.20
Direct labor	0.30	0.30

CBIs controller, Mona Clin, believes that its current product costing system could be providing misleading cost information. She has developed this analysis of the current years budgeted factory overhead costs:

Activity	Cost Driver	Budgeted Driver Consumption	Budgeted Cost
Purchasing	Purchase orders	1,068	$ 570,000
Materials handling	Setups	1,710	711,000
Quality control	Batches	630	135,000
Roasting	Roasting hours	95,200	952,000
Blending	Blending hours	32,700	327,000
Packaging	Packaging hours	25,100	251,000
Total factory overhead cost			$ 2,946,000

Data regarding the current years production of just two of its lines, Mona Loa and Malaysian, follow. There is no beginning or ending direct materials inventory for either of these coffees.

	Mona Loa	Malaysian
Budgeted sales	100,900 pounds	1,910 pounds
Batch size	9,100 pounds	410 pounds
Setups	3 per batch	3 per batch
Purchase order size	24,100 pounds	410 pounds
Roasting time	1 hour per 100 pounds	1 hour per 100 pounds
Blending time	0.5 hour per 100 pounds	0.5 hour per 100 pounds
Packaging time	0.1 hour per 100 pounds	0.1 hour per 100 pounds

1) Using Coffee Bean Incorporateds current product costing system, determine the full product costs and selling prices of one pound of Mona Loa coffee and one pound of Malaysian coffee. (Round your answers to 2 decimal places.)

	Mona Loa	Malaysian
Product costs
Budgeted selling price per pound

2) Using an activity-based costing approach, develop a new product cost for 1 pound of Mona Loa coffee and 1 pound of Malaysian coffee. Allocate all overhead costs to the 100,900 pounds of Mona Loa and the 1,910 pounds of Malaysian. (Round intermediate calculations to 2 decimal places.)

	Mona Loa Coffee		Malaysian Coffee
Direct unit costs:
Direct materials
Direct labor		$0.00		$0.00
Indirect unit costs:
Purchasing
Material handling
Quality control
Roasting
Blending
Packaging
Total unit cost		$0.00		$0.00