Java Source, Incorporated, (USI) 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 $3,064,500. JSI assigns manufacturing overhead to products on the basis of direct labor-hours. The expected direct labor cost totals $624,000, which represents 52,000 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 (0.035 hours per bag) Kenya Dark Viet Select $ 4.20 $0.42 $3.10 $0.42 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 Expected Cost Year 1,680 orders 1,770 setupe 640 batches 95,600 roasting hours 33,900 blending hours 25,700 packaging hours for the Year $504,000 725,700 147,200 956,000 474,600 257,000 F 3,044,500 Data regarding the expected production and sales of Kenya Dark and Viet Select coffee are presented below. Expected production and sales Batch size Purchase order size, Boasting time per 100 pounds Blending time per 100 pounda Packaging time per 100 pounds Required: Kenya Dark 103,000 pounds 10,300 pounds 3 per batch 20,600 pounds 1.5 roasting bours 0.5 blending hours 0.3 packaging hours. Viet Select 2,000 pounds 400 pounds 3 per batch. 400 pounds 1.5 roasting hours 0.5 blending hours 0.3 packaging hours