Using direct labor-hours as the manufacturing overhead cost allocation base, do the following:a. Determine the plantwide predetermined overhead rate that will be used during the year. b. Determine the unit product cost of one pound of Kenya Dark coffee and one pound of Viet Select coffee.2.Using the activity-based absorption costing approach, do the following:a. Determine the total amount of manufacturing overhead cost assigned to Kenya Dark coffee and to Viet Select coffee for the year. b. Using the data developed in (2a) above, compute the amount of manufacturing overhead cost per pound of Kenya Dark coffee and Viet Select coffee. c. Determine the unit product cost of one pound of Kenya Dark coffee and one pound of Viet Select coffee.3.Write a briefmemo to the president of NCI that explains what you found in steps 1 and 2 and that discusses the implications of using direct labor-hours as the only manufacturing overhead cost allocation base.

Explanation:

Plantwide overhead rate = Estimated overheads/Total Labor Hours

58.35660377per hour

Calaculation of Unit product Cost

Kenya DarkViet Select

Direct Material4.13.1

Direct Labor0.420.42

Overheads2.0424811322.042481132

Unit cost6.5624811325.562481132

Kenya DarkViet Select

Activity Cost PoolActivity MeasureExpected Activity for the YearCostActivity RateDriver ConsumptionOverhead AssignedDriver ConsumptionOverhead Assigned

PurchasingPurchase orders1,740orders487,2002805140051400

Material handlingNumber of setups1,790setups698,100390207800103900

Quality controlNumber of batches560batches128,80023010230051150

RoastingRoasting hours95,700roasting hours1,148,4001215751890015180

BlendingBlending hours33,400blending hours367,400115255775555

PackagingPackaging hours26,300packaging hours263,000103153150330

Total manufacturing overhead cost 3,092,900 Total Assigned39325 6715

Number of pounds105000 1000

Cost per Pound0.37452381 6.715

Using ABC

Kenya DarkViet Select

Direct Material4.13.1

Direct Labor0.420.42

Overheads0.374523816.715

Unit cost4.8945238110.235

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