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. 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. Data for the current budget include factory overhead of $3,042,000, 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). The budgeted direct costs for 1-pound bags are as follows: Direct materials Direct labor Mona Loa $ 4.20 Malaysian $ 3.20 0.30 D 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 Budgeted Driver Cost Driver Purchase orders Setups Batches) Roasting hours 96,400 Blending hours 33,900 Consumption Budgeted Cost 1,188 1,830 750 $ 594,000 732,000 150,000 964,000 339,000 < Prev 3 of 4 Next > 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 Batches Budgeted Driver Consumption 1,188 1,830 750 Budgeted Cost Cost Driver Purchase orders $ 594,000 Setups 732,000 150,000 Roasting Roasting hours 96,400 964,000 Blending Blending hours 33,900 339,000 Packaging Packaging hours 26,300 263,000 Total factory overhead cost $ 3,042,000 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. 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 Coffee Bean has total practical capacity as noted in the table below, Le. processing 1.460 purchase orders, 2.460 setups, etc. These are the levels of activity work that are sustainable. Activity Purchasing Practical Capacity 1,460 < Prev 3 of 4 Next > 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 Coffee Bean has total practical capacity as noted in the table below, Le. processing 1,460 purchase orders, 2,460 setups, etc. These are the levels of activity work that are sustainable. Activity Purchasing Materials handling Quality control Practical Capacity 1,460 2,460 1,260 Roasting Blending Packaging 100,600 36,600 30,600 Required: 1. Determine the activity rates based on practical capacity and the cost of idle capacity for each activity. (Round "Usage %" and "Practical Capoctity Rate" to 2 decimal places. For percentages .1234 - 12.34%) Activity Budgeted Activity Budgeted Cost Usage Based Practical Capacity at Rate Current Spending Usage % Practical Capacity Rate Unused Capacity Idle Capacity Cost < Prev 3 of 4 Next > Activity Capacity Purchasing 1,460 Materials handling 2,460 Quality control 1,260 Roasting Blending 100,600 Packaging 36,600 30,600 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 Practical Capacity at Rate Current Usage %1 Practical Capacity Rate Unused Capacity Idle Capacity Cost Spending Purchasing 1,188 $ 594,000 1460 Materials handling 1,830 $ 732,000 2,460 Quality control 750 S 150,000 1,260 Roasting 96,400 $ 964,000 100,600 Blending 33,900 $ 339,000 36,600 Packaging 26,300 $ 263,000 30,600 $ 3,042,000 S