Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Java Source, Inc., (JSI) buys coffee beans from around the world and roasts, blends, and packages them for resale. Some of JSI's coffees are very

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Java Source, Inc., (JSI) buys coffee beans from around the world and roasts, blends, and packages them for resale. Some of JSI's coffees are very popular and sell in large volumes, while a few of the newer blends sell in very low volumes. JSI prices its coffees at manufacturing cost plus a markup of 25%. For the coming year, JSI's budget includes estimated manufacturing overhead cost of $2.874,600. JSI assigns manufacturing overhead to products on the basis of direct labor-hours. The expected direct labor cost totals $564,000, which represents 47,000 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 (.025 hours per bag) Kenya Dark Viet Select $ 4.50 $ 3.30 $ .30 $ 0.30 JSI'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 Total manufacturing overhead cost Activity Measure Purchase orders Number of setups Number of batches Roasting hours Blending hours Packaging hours Expected Activity for the Year 1,720 orders 1.840 setups 580 batches 95,900 roasting hours 33,108 blending hours 26,000 packaging hours Expected Cost for the Year $ 533,200 772,880 133,400 863, 100 364.100 208,000 $ 2,874,600 Data regarding the expected production of Kenya Dark and Viet Select coffee are presented below Expected sales Batch size Setups Purchase order size Roasting time per 100 pounds Blending time per 100 pounds Packaging time per 100 pounds Kenya Dark 100.000 pounds 10.000 pounds 3 per batch 20,000 pounds 1.5 roasting hours 0.5 blending hours 0.3 packaging hours Viet Select 3,000 pounds 600 pounds 3 per batch 6ee pounds 1.5 roasting hours 0.5 blending hours 0.3 packaging hours Required: 1. Using direct labor-hours as the manufacturing overhead cost allocation base, do the following: a. Determine the plantwide predetermined overhead rate that will be used during the year. b. Determine the unit product cost of one pound of Kenya Dark coffee and one pound of Viet Select coffee. 2. Using the activity-based absorption costing approach, do the following: a. Determine the total amount of manufacturing overhead cost assigned to Kenya Dark coffee and to Viet Select coffee for the year b. Using the data developed in (2 a) above, compute the amount of manufacturing overhead cost per pound of Kenya Dark coffee and Viet Select coffee. c. Determine the unit product cost of one pound of Kenya Dark coffee and one pound of Viet Select coffee. Complete this question by entering your answers in the tabs below. Required 1A Required 18 Required 2A Required 2B Required 20 Using direct labor hours as the manufacturing overhead cost allocation base. Determine the plantwide predetermined overhead rate that will be used during the year. (Round your answer to 2 decimal places.) Predetermined overhead tato per DLH (Required 1A Required 1B > Complete this question by entering your answers in the tabs below. Required 1A Required 1 Required 2A Required 2B Required 2C Using direct labor-hours as the manufacturing overhead cost allocation base. Determine the unit product cost of one pound of Kenya Dark coffee and one pound of Viet Select coffee. (Round your intermediate calculations and final answers to 2 decimal Kenya Dark Viet Select Unit product cost Required 1A Required 2A > Required 1A Required 1B Required 2A Required 2B Required 20 Using the activity-based absorption costing approach, determine the total amount of manufacturing overhead cost assigned to Kenya Dark coffee and to Viet Select coffee for the year. Kenya Dark Viet Select Total amount of manufacturing overhead cost Required 1A Required 1B Required 2A Required 2B Required 2C Using the activity-based absorption costing approach, compute the amount of manufacturing overhead cost per pound of Kenya Dark coffee and Viet Select coffee. (Round your answers to 2 decimal places.) Kenya Dark Viet Select Manufacturing overhead cost per pound Required 1A Required 1B Required 2A Required 2B Required 2C Using the activity-based absorption costing approach, determine the unit product cost of one pound of Kenya Dark coffee and one pound of Viet Select coffee. (Round your intermediate calculations and final answers to 2 decimal places.) Kenya Dark Viet Select Unit product cost of one pound

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Cases

Authors: Frank A. Buckless, Mark. S. Beasley, Steven M. Glover, Douglas F. Prawitt

1st Edition

978-0130800015

More Books

Students also viewed these Accounting questions