Ivanhoe Inc. is a distributor and processor of a variety of different blends of coffee. The company buys coffee beans from around the world and roasts, blends, and packages them for resale. Ivanhoe Inc. Currently offers 10 different coffees in 500 gram bags to gourmet shops. The major cost is raw materials; however, there is a substantial amount of manufacturing overhead in the mostly automated roasting and packing process. The company uses relatively little direct labour Some of the coffees are very popular and sell in large volumes, while a few of the newer blends have very low volumes. Ivanhoe Inc. prices its coffee at total product costs, including allocated overhead, plus a markup of 25%. If prices for certain coffees are significantly higher than market the prices are adjusted lower Data for the 2022 budget include manufacturing overhead of $3.7 million, which has been allocated in the existing costing system based on each product's budgeted direct labour cost. The budgeted direct labour cost for 2022 totals $740,000. Purchases and use of materials (mostly coffee beans) are budgeted to total $6 million The budgeted prime costs for 500-gram bags of two of the company's products are as follows Direct materials Direct labour Mocha $3.20 50.25 Vanilla $2.80 $0.25 Data for the 2022 production of Mocha and Vanilla coffee are as follows. There will be no beginning or ending materials inventory for either of these coffees. Expected sales Batch size Set-ups Purchase order size Roasting time Blending time Packaging time Mocha 50,000 kilograms 50,000 kilograms 3 per batch 12.500 kilograms 1 hour/50 ks 0.50 hour/50 kg 0.10 hour/50 kg Vanilla 1,000 kilograms 250 kilograms 3 per batch 250 kilograms hour/50 kg 0.50 hour/50 ks 0.10 hour 50 ks 100 Ivanhoe's controller believes the traditional costing system may be providing misleading cost information. He has developed an activity-based analysis of the 2022 budgeted manufacturing overhead costs shown in the following table: Activity Pools Cost Drivers Purchasing Material handing Quality control Roasting Blending Packaging Total manufacturing overhead cost Purchase orders Set-ups Batches Roasting hours Blending hours Packaging hours Budgeted Units 1,200 1.800 500 104,000 24.100 31.000 Budgeted Cost S 600.000 639,000 160.000 1040,000 482.000 775.000 $3,695,000 eTextbook and Media Attempts: 2 of 2 used (5) Use the controller's activity based approach to estimate the 2022 budgeted cost for one kilogram of Mocha coffee and one Kilogram of Vanilla coffee. (Round intermediate calculations and final answers to 3 decimal places : 15.258) Mocha Vanilla Budgeted cost for one kilogram 5 Textbook and Media Sans for Attempts of used Sub 11
