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 $3,070,000, 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 Mona Loa $ 4.20 Direct labor 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: Budgeted Activity Purchasing Cost Driver Purchase orders Driver Consumption 1,208 Budgeted Cost $ 604,000 Materials handling Setups Quality control Batches 1,850 770 740,000 154,000 Roasting Roasting hours Blending Blending hours 96,600 34,100 966,000 341,000 Packaging Packaging hours 26,500 265,000 Total factory overhead cost $ 3,070,000 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 1,500 purchase orders, 2,500 setups, etc. These are the levels of activity work that are sustainable. Practical Activity Capacity Purchasing. 1,500 Materials handling 2,500 Quality control 1,300 Roasting 101,000 37,000 31,000 Blending Packaging 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%) 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 sise Setups Purchase order size Roasting tine Blending time Packaging time Mona Los 100,000 pounda 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 Halaysian 2,000 pounds 500 pounds 3 per batch 500 pounds 1 hour per 100 pounds 0.5 hour per 100 pounde 0.1 hour per 100 pounds Coffee Bean has total practical capacity as noted in the table below, Le. processing 1,500 purchase orders, 2,500 setups, etc. These are the levels of activity work that are sustainable. Practical Activity Capacity Purchasing 1,500 Materials handling 2,500 Quality control 1,300 Roasting 101,000 37,000 31,000 Blending Packaging 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 Usage % Practical Capacity Rate Unused Capacity Idle Capacity Cost Spending Purchasing 1,208 $ 604,000 1,500 Materials handing 1,850 $ 740,000 2,500 Quality control 770 $ 154,000 1,300 Roasting Blending Packaging 96,600 $ 966,000 101,000 34,100 $ 341,000 37,000 26,500 $ 265,000 31,000 $ 3,070,000 $ 0