For the coming year, CBI's budget includes estimated manufacturing overhead cost of $3,240,000. CBI assigns manufacturing overhead to products on the basis of direct labor-hours. The expected direct labor cost totals $540,000, which represents 54,000 hours of direct labor time. The expected costs for direct materials and direct labor for one-pound bags of two of the company's coffee products appear below. Direct materials Direct labor (0.025 hours per bag) Mona Loa $ 4.60 $ 0.25 Malaysian $ 3.60 $ 0.25 CBI's controller believes that the company's traditional costing system may be providing misleading cost information. To determine whether or not this is correct, the controller has prepared an analysis of the year's expected manufacturing overhead costs, as shown in the following table: Activity Cost Pool Purchasing Material handling Quality control Roasting Blending Packaging Activity Measure Purchase orders Number of setups Number of batches Roasting hours Blending hours Packaging hours Total manufacturing overhead cost Expected Activity for the Year 1,750 orders 1,840 setups 640 batches 96,500 roasting hours 33,900 blending hours 22,180 packaging hours Expected Cost for the Year $ 595,000 809,600 179,200 1,061,500 372,900 221,800 $ 3,240,000