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Need to check my answers. Answer with steps and terminology please! Coffee Bean Incorporated (CBI) processes and distributes high-quality coffee. CBI buys coffee beans from
Need to check my answers. Answer with steps and terminology please!
Coffee Bean Incorporated (CBI) processes and distributes high-quality coffee. CBI buys coffee beans from around the world and roasts, blends, and packages them for resale. Currently, the firm offers 2 coffees to gourmet shops in 1-pound bags. The major cost is direct materlals; however, a substantlal amount of factory overhead Is incurred in the predominantly automated roasting and packing process. The company uses relatively Ilttle direct labor. CBI prices Its coffee at full product cost, Including allocated overhead, plus a markup of 30%. If Its prices are significantly higher than the market, CBI lowers Its prices. The company competes primarly on the quality of its products, but customers are price conscious as well. Data for the current budget Include factory overhead of $3,126,000, which has been allocated on the basls of each product's direct labor cost. The budgeted direct labor cost for the current year totals $600,000. The firm budgeted $6,000,000 for purchase and use of direct materlals (mostly coffee beans). The budgeted direct costs for 1-pound bags are as follows: CBI'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: Data regarding the current year's production for the Mona Loa and Malayslan Iines follow. There is no beginning or ending direct materlals Inventory for elther of these coffees. Coffee Bean has total practical capacity as noted in the table below, l.e. processing 1,580 purchase orders, 2,580 setups, etc. These are the levels of actlvity work that are sustainable. 1. Determine the actlvity rates based on practical capacity and the cost of Idle capacity for each actlvity. (Round "Usage % " and "Practical Capactity Rate" to 2 decimal places. For percentages .1234=12.34%.)Step by Step Solution
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