Problem 1 Community Coffee Company (CCC) is a processor and distributor of gourmet coffees sold in grocery stores through the Southeastern United States. CCC buys coffee beans from around the world and roasts, blends and packages them for resale. CCC currently produces 15 gourmet blends which it sells in 1 pound bags. Some coffee blends are very popular and sell at a very high volume, while other, newer blends sell at low volumes. CCC sells its coffee at full cost (i.e., direct costs plus overhead costs) plus a 30% markup (that is, the price is 1.3 times the full cost). Data for the 2006 budget include manufacturing overhead of $2,600,000, which has been allocated based upon direct labor cost (i.e. labor $ ). The budgeted direct labor cost for 2006 is $1,000,000. Anticipated unit costs for two of the 15 different blends that CCC produces are as follows: (note 1 pound of coffee =1 unit): Community Coffee recently hired a new controller who is concerned that the traditional costing system may be providing misleading information and is considering implementing activity based costing. She has developed a detailed analysis of the company's 2006's budgeted manufacturing overhead costs (shown below): Data regarding the total production requirements for both blends of coffee are shown in the following table. Assume there was no raw material inventory for either coffee at the beginning of the year: Problem 1 - Part A. (1 point) Using CCC's current product costing system, determine the full product cost and selling prices for 1 pound of both types of coffee. Problem 1 - Part B. ( 2 points) Using activity based costing, determine the new product costs for 1 pound of both types of coffee. Problem 1 - Part C. ( 2 points) Interpret the new information provided by the ABC system. Based on the information provided by the ABC system what would you recommend to CCC as far as product pricing is concerned