Worid Gourmet Coffee Company $($WGCC$)$ is a distributor and processor of different blends of coffee. The company buys coffee beans

from around the world and roasts, blends, and packages them for resale. WGCC currently has $15$ different coffees that it offers to

gourmet shops in one$-$pound bags. The major cost is raw materlals; however, there is a substantlal amount of manufacturing overhead

in the predominantly automated roasting and packing process. The company uses relatively little direct labor.

Some of the coffees are very popular and sell In large volumes, while a few of the newer blends have very low volumes. WGCC prices

its coffee at full product cost, including allocated overhead, plus a markup of $35$ percent. If prices for certaln coffees are significantly

higher than market, adjustments are made. The company competes primarlly on the quality of its products, but customers are price$-$

conscious as well.

Data for the $201$ budget include manufacturing overhead of $$18,810,240,$ which has been allocated on the basis of each product's

direct$-$labor cost. The budgeted direct$-$labor cost for $201$ totals $$1,881,024.$ Based on the sales budget and raw$-$materlal budget,

purchases and use of raw materlals $($mostly coffee beans$)$ will total $$7,000,000.$

The expected prime costs for one$-$pound bags of two of the company's products are as follows:

WGCC$\text{'}$s controller believes the traditional product$-$costing system may be providing misleading cost information. She has developed

an analysis of the $201$ budgeted manufacturing$-$overhead costs shown in the following chart.

Data regarding the $201$ production of Kona and Malayslan coffee are shown in the following table. There will be no raw$-$materlal

Inventory for elther of these coffees at the beginning of the year.

Required:

UsIng WGCC$\text{'}$s current product$-$costing system:

a$.$ Determine the company's predetermined overhead rate using direct$-$labor cost as the single cost drlver.

b$.$ Determine the full product costs and selling prices of one pound of Kona coffee and one pound of Malayslan coffee.

$2$ Develop a new product cost, using an actJvity$-$based costing approach, for one pound of Kona coffee and one pound of Malayslan

coffee.

Complete this question by entering your answers in the tabs below.

Req $1A$

Req $2$

Develop a new product cost, using an activity$-$based costing approach, for one pound of Kona coffee and one pound of

Malaysian coffee. $($Round your intermediate calculations and final answers to $2$ decimal places.$)$