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Coffee Bean Incorporated (CBI) processes and distributes avariety of coffee. CBI buys coffee beans from around the world androasts, blends, and packages them for resale. Currently, the firmoffers 15 coffees to gourmet shops in 1-pound bags. The major costis direct materials; however, a substantial amount of factoryoverhead is incurred in the predominantly automated roasting andpacking process. The company uses relatively little direct labor.Some of the coffees are very popular and sell in large volumes; afew of the newer brands have very low volumes. CBI prices itscoffee at full product cost, including allocated overhead, plus amarkup of 30%. If its prices for certain coffees are significantlyhigher than the market, CBI lowers its prices. The company competesprimarily on the quality of its products, but customers are priceconscious as well. Data for the current budget include factoryoverhead of $2,994,000, which has been allocated on the basis ofeach product’s direct labor cost. The budgeted direct labor costfor the current year totals $599,000. The firm budgeted $5,900,000for purchase and use of direct materials (mostly coffee beans). Thebudgeted direct costs for 1-pound bags of two of the company’s manyproducts are as follows: Mona Loa Malaysian Direct materials $ 4.20$ 3.20 Direct labor 0.30 0.30 CBI’s controller, Mona Clin, believesthat its current product costing system could be providingmisleading cost information. She has developed this analysis of thecurrent year’s budgeted factory overhead costs: Activity CostDriver Budgeted Driver Consumption Budgeted Cost PurchasingPurchase orders 1,148 $ 578,000 Materials handling Setups 1,790719,000 Quality control Batches 710 143,000 Roasting Roasting hours96,000 960,000 Blending Blending hours 33,500 335,000 PackagingPackaging hours 25,900 259,000 Total factory overhead cost $2,994,000 Data regarding the current year’s production of just twoof its lines, Mona Loa and Malaysian, follow. There is no beginningor ending direct materials inventory for either of these coffees.Mona Loa Malaysian Budgeted sales 100,100 pounds 1,990 pounds Batchsize 9,900 pounds 490 pounds Setups 3 per batch 3 per batchPurchase order size 24,900 pounds 490 pounds Roasting time 1 hourper 100 pounds 1 hour per 100 pounds Blending time 0.5 hour per 100pounds 0.5 hour per 100 pounds Packaging time 0.1 hour per 100pounds 0.1 hour per 100 pounds Required: 1. Using Coffee BeanIncorporated’s current product costing system, a. Determine thecompany’s predetermined overhead rate using direct labor cost asthe single cost driver. b. Determine the full product costs andselling prices of one pound of Mona Loa coffee and one pound ofMalaysian coffee. 2. Using an activity-based costing approach,develop a new product cost for 1 pound of Mona Loa coffee and 1pound of Malaysian coffee. Allocate all overhead costs to the100,100 pounds of Mona Loa and the 1,990 pounds of Malaysian.
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6 Coffee Bean Incorporated (CBI) processes and distributes a variety of coffee. CBI buys coffee beans from around the world and roasts, blends, and packages them for resale. Currently, the firm offers 15 coffees to gourmet shops in 1-pound bags. The major cost is direct materials; however, a substantial amount of factory overhead is incurred in the predominantly automated roasting and packing process. The company uses relatively little direct labor. 30 points eBook Print References Some of the coffees are very popular and sell in large volumes; a few of the newer brands have very low volumes. CBI prices its coffee at full product cost, including allocated overhead, plus a markup of 30%. If its prices for certain coffees are significantly higher than the market, CBI lowers its prices. The company competes primarily on the quality of its products, but customers are price conscious as well. Data for the current budget include factory overhead of $2,994,000, which has been allocated on the basis of each product's direct labor cost. The budgeted direct labor cost for the current year totals $599,000. The firm budgeted $5,900,000 for purchase and use of direct materials (mostly coffee beans). The budgeted direct costs for 1-pound bags of two of the company's many products are as follows: Mona Loa $ 4.20 Malaysian $ 3.20 0.30 0.30 Direct materials Direct labor 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: Activity Purchasing Materials handling Quality control Roasting Blending Cost Driver Purchase orders Setups Batches Roasting hours Blending hours Budgeted Driver Consumption 1,148 1,790 710 96,000 33,500 Budgeted Cost $ 578,000 719,000 143,000 960,000 335,000 Check my work 3

6 CBI's controller, Mona Clin, believes that its current product costing system could be providing misleading cost information. She nas developed this analysis of the current year's budgeted factory overhead costs: 30 points eBook Print References Activity Purchasing Materials handling Quality control Roasting Blending Packaging Total factory overhead cost Budgeted sales Batch size 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 for either of these coffees. Setups Mona Loa 100,100 pounds 9,900 pounds 3 per batch K-KE 24,900 pounds 1 hour per 100 pounds 0.5 hour per 100 pounds 0.1 hour per 100 pounds Purchase order size Roasting time Cost Driver Purchase orders Setups Batches Roasting hours Blending hours Packaging hours Blending time Budgeted Driver Consumption 1,148 1,790 710 Packaging time 96,000 33,500 25,900 Budgeted Cost $ 578,000 719,000 143,000 960,000 335,000 259,000 $ 2,994,000 490 pounds 1,990 pounds 3 per batch 490 pounds Malaysian 1 hour per 100 pounds 0.5 hour per 100 pounds 0.1 hour per 100 pounds Required: 1. Using Coffee Bean Incorporated'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 for 1 pound of Mona Loa coffee and 1 pound of Malaysian coffee. Allocate all overhead costs to the 100.100 pounds of Mona Loa and the 1.990 pounds of Malavsian. Check my work 3

Chapter 5 homework i 6 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 for either of these coffees. 30 points eBook Print References Budgeted sales Batch size Setups Purchase order size Roasting time Blending time Packaging time Mona Loa 100,100 pounds 9,900 pounds 3 per batch 24,900 pounds 1 hour per 100 pounds 0.5 hour per 100 pounds 0.1 hour per 100 pounds Req 1A Saved Req 1B Required: 1. Using Coffee Bean Incorporated'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 for 1 pound of Mona Loa coffee and 1 pound of Malaysian coffee. Allocate all overhead costs to the 100,100 pounds of Mona Loa and the 1,990 pounds of Malaysian. Complete this question by entering your answers in the tabs below. Req 2 Malaysian 1,990 pounds 490 pounds 3 per batch 490 pounds 1 hour per 100 pounds 0.5 hour per 100 pounds 0.1 hour per 100 pounds Using Coffee Bean Incorporated's current product costing system, determine the company's predetermined overhead rate using direct labor cost as the single cost driver. (Round your answer to 2 decimal places.) Predetermined factory overhead rate per direct-labor dollar Help Save & Exit Submit Check my work 3

6 30 points eBook Print References Budgeted sales Batch size Setups Purchase order size Roasting time Blending time Packaging time Req 1A Mona Loa 100,100 pounds 9,900 pounds 3 per batch 24,900 pounds Req 1B 1 hour per 100 pounds 0.5 hour per 100 pounds 0.1 hour per 100 pounds Required: 1. Using Coffee Bean Incorporated'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 for 1 pound of Mona Loa coffee and 1 pound of Malaysian coffee. Allocate all overhead costs to the 100,100 pounds of Mona Loa and the 1,990 pounds of Malaysian. Complete this question by entering your answers in the tabs below. Product costs Budgeted selling price per pound Req 2 Malaysian 1,990 pounds 490 pounds 3 per batch 490 pounds 1 hour per 100 pounds 0.5 hour per 100 pounds 0.1 hour per 100 pounds Using Coffee Bean Incorporated's current product costing system, determine the full product costs and selling prices of one pound of Mona Loa coffee and one pound of Malaysian coffee. (Round your answers to 2 decimal places.) Malaysian Mona Loa Check my work 3

6 2. Using an activity-based costing approach, develop a new product cost for 1 pound of Mona Loa coffee and 1 pound of Malaysian coffee. Allocate all overhead costs to the 100,100 pounds of Mona Loa and the 1,990 pounds of Malaysian. 30 points eBook Print References Complete this question by entering your answers in the tabs below. Req 1A Direct unit costs: Direct materials Direct labor Indirect unit costs: Purchasing Material handling Req 1B Using an activity-based costing approach, develop a new product cost for 1 pound of Mona Loa coffee and 1 pound of Malaysian coffee. Allocate all overhead costs to the 100,100 pounds of Mona Loa and the 1,990 pounds of Malaysian. (Round intermediate calculations to 2 decimal places.) Quality control Roasting Blending Packaging Total unit cost Req 2 Mona Loa Coffee Malaysian Coffee Check my work 3