Coffee Bean Incorporated (CBI) processes and distributes highquality 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 1pound 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 $3,154,000, 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 'lpound bags are as follows: Mona Loa Malaysian Direct materials $ 4.20 $ 3.20 Direct labor 0.30 0.30 CBl'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 Driver Activity Cost Driver Consumption Budgeted Cost Purchasing Purchase orders 1,268 $ 634,000 Materials handling Setups 1,910 764,000 Quality control Batches 830 166,000 Roasting Roasting hours 97,200 972,000 Blending Blending hours 34,700 347,000 Packaging Packaging hours 27,100 271,000 Total factory overhead cost $ 3,154,000 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. Mona Loa Malaysian Budgeted sales 100,000 pounds 2,000 pounds Batch size 10,000 pounds 500 pounds Setups 3 per batch 3 per batch Purchase order size 25,000 pounds 500 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 Coffee Bean has total practical capacity as noted in the table below, i.e. processing 1,620 purchase orders, 2,620 setups, etc. These are the levels of activity work that are sustainable. Practical Activity Capacity Purchasing 1,620 Materials handling 2,620 Quality control 1,420 Roasting 102,200 Blending 38,200 Packaging 32,200 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%.) Purchasing 1,268 $ 634,000_ 1,620 Materials handling 1,910 $ 764,000 _m 830 166,000 _ 1,420 66 Quality control Roasting 972,000 _ 102,200 Blending 347,000 _ 33,200 Packaging 271,000 _ 32,200 354DOO