Managerial Accounting

The budgeted direct costs for 1-pound bags of two of the company's many products are as follows: Mona Loa Malaysian Direct materials $ 4.20 $ 3.20 Direct labor 0 . 30 0 . 30 [ CBl's controller, Mona Clin, believes that its current product costing system could be providing misleading cost information. She has developed this analysis of the current year's budgeted factory overhead costs: Budgeted Activity Cost Driver Activity Budgeted Cost Purchasing Purchase orders 1,258 5 589,000 Materials handling Setups 1,900 780,000 Qualityr control Batches 320 154,000 Roasting Roasting hours 9?,100 9?1,000 Blending Blending hours 34,600 346,000 Packaging Packaging hours 2?,000 2?0,000 Total factory overhead cost 5 3:359:33? Data regarding the current year's production ofjust two of its lines, Mona Loa and Malaysian, follow. There is no beginning or ending direct materials inventory for either of these coffees. Mona Loa Malaysian Budgeted sales 110,000 pounds 2,100 pounds Batch size 11,000 pounds 600 pounds Setups 3 per batch 3 per batch Purchase order size 26,000 pounds 500 pounds Roasting time 1 hour per 100 pounds 1 hour per 100 pounds Blending time 0.5 hour per 100 pounds 0.5 hour per 100 pounds Packaging time 0.1 hour per 100 pounds 0.1 hour per 100 pounds [ Required: 1. Using Coffee Bean lnc.'s current product costing system. a. Determine the company's predetermined overhead rate using direct labor cost as the single cost driver. b. Determine the full product costs and selling prices of one pound of Mona Loa coffee and one pound of Malaysian coffee. 2. Using an activity-based costing approach, develop a new product cost for1 pound of Mona Loa coffee and 1 pound of Malaysian coffee. Allocate all overhead costs to the 110,000 pounds of Mona Lea and the 2,100 pounds of Malaysian