Direct material Direct labor Kona Malaysian $3.20 $0.30 $4.20 $0.30 WGCC's controller believes that the direct-labor based product costing system is providing misleading cost information. She has developed an analysis of 2012's manufacturing costs as below: Cost driver Activity Purchasing Purchase orders Material handling Setups Quality control Batches Roasting Roasting hours Blending Blending hours Packaging Packaging hours Total manufacturing overhead cost Budgeted Activity Budgeted cost 1,158 $579,000 1,800 720,000 720 144,000 96,100 961,000 33,600 336,000 26,000 260,000 $3,000,000 Data regarding the 2012 production of Kona and Malaysian Coffees are shown below: Budgeted Sales Number of batches Setups Purchase orders Roasting time Blending time Packaging time Kona 2,000 pounds 4 12 Malaysian 100,000 pounds 10 30 4 4 20 hours (1 hour per 100 pounds) 10 hours 2 hours (0.5 hour per 100 pounds) 1000 hours (1 hour per 100 pounds) 500 hours (0.5 hour per 100 pounds) 100 hours (0.1 hour per hundred pounds) (0.1 hour per hundred pounds)