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only part 2 please! Coffee Bean Inc (CB) processes and distributes a variety of coffee. Cei buys coffee beans from around the woeld and roasts,
only part 2 please!
Coffee Bean Inc (CB) processes and distributes a variety of coffee. Cei buys coffee beans from around the woeld and roasts, biends, and packages them for resale. Currently, the firm offers 15 coffees to gourmet shops in 1-pound bags. The major cost is direct materials; howewer, a substantial amount of factory owerhead is incurred in the predominantly automated roasting and packing process. The compary uses relathely ittie direct laboe Some of the coffees are very popular and sel in large wolumes; a few of the newer brands have very low wolumes. Cel prices its caffee at ful product cost, including allocated owerheod, plus a marloup of 30%. If its prices for certain coffecs are significantly higher than the market, CBI lowers its prices. The company competes primarily on the quality of its peoducts, but customers are price conscious as well. Data for the current budget include factory overhead of $2,000,000, which has been allocated on the basis of each product's direct labor cost. The budgeted direct labor cost for the current year tatals $590,000. The firm budgeted $5,000,000 for purchase and use of direct materials (mastly coffec beans) The budgeted direct costs for 1-pound bogs of two of the company's mary products are as follows: CBl's controler, Mona Clin, believes that its current product costing system could be providing misleading cost information. She has deweloped this analysis of the current year's budgeted factory overhead costs: Data regarding the current year's production of just two of its lines, Mona Loa and Malaysian, follow. There is no beginning or ending direct materials inventory foe either of these coffees. Required: 1. Using Coffee Bean Inc's current product costing system, a. Determine the company's predetermined averhead rate using direct labor cost as the single cost driver. b. Determine the ful product costs and selling peices of one pound of Mana Loa coffee and one pound of Malaysian cotfee. 2. Using an activity-based costing approach, develop a new product cost for 1 pound of Mona Loa cofiee and 1 pound of Malaysian coffec. Alocate all owerhead costs to the 101,000 pounds of Mona Loa and the 1,900 pounds of MalaysianStep by Step Solution
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