Java Source, Incorporated, (JSI) buys coffee beans from around the world and roasts, blends, and packages...

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Java Source, Incorporated, (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 $3,104,900. JSI assigns manufacturing overhead to products on the basis of direct labor-hours. The expected direct labor cost totals $600,000, which represents 50,000 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 (0.030 hours per bag) Kenya Dark Viet Select $ 4.20 $ 0.36 $ 3.20 $ 0.36 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 Packaging Total manufacturing overhead cost Blending Activity Measure Purchase orders Number of setups Number of batches Roasting hours Blending hours Packaging hours Expected Activity for the Expected Cost Year 1,710 orders 1,830 setups 570 batches 95,800 roasting hours 33,900 blending hours 26,200 packaging hours for the Year $ 495,900 695,400 136,800 1,149,600 339,000 288,200 $ 3,104,900 Data regarding the expected production and sales of Kenya Dark and Viet Select coffee are presented below. Expected production and sales. Batch size Setups Purchase order size. Roasting time per 100 pounds Blending time per 100 pounds Packaging time per 100 pounds Required: Kenya Dark 105,000 pounds 10,500 pounds 2 per batch 21,000 pounds 1.5 roasting hours 0.5 lending hours 0.3 packaging hours Viet Select 3,000 pounds 600 pounds 2 per batch 600 pounds. 1.5 roasting hours 0.5 blending hours 0.3 packaging hours 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 (2a) 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. Java Source, Incorporated, (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 $3,104,900. JSI assigns manufacturing overhead to products on the basis of direct labor-hours. The expected direct labor cost totals $600,000, which represents 50,000 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 (0.030 hours per bag) Kenya Dark Viet Select $ 4.20 $ 0.36 $ 3.20 $ 0.36 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 Packaging Total manufacturing overhead cost Blending Activity Measure Purchase orders Number of setups Number of batches Roasting hours Blending hours Packaging hours Expected Activity for the Expected Cost Year 1,710 orders 1,830 setups 570 batches 95,800 roasting hours 33,900 blending hours 26,200 packaging hours for the Year $ 495,900 695,400 136,800 1,149,600 339,000 288,200 $ 3,104,900 Data regarding the expected production and sales of Kenya Dark and Viet Select coffee are presented below. Expected production and sales. Batch size Setups Purchase order size. Roasting time per 100 pounds Blending time per 100 pounds Packaging time per 100 pounds Required: Kenya Dark 105,000 pounds 10,500 pounds 2 per batch 21,000 pounds 1.5 roasting hours 0.5 lending hours 0.3 packaging hours Viet Select 3,000 pounds 600 pounds 2 per batch 600 pounds. 1.5 roasting hours 0.5 blending hours 0.3 packaging hours 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 (2a) 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.