Coffee Bean Inc. $($CBI$)$ is a processor and distributor of a variety of blends of coffee. The company

buys coffee beans from around the world and roasts, blends, and packages them for resale. CBI

offers a large variety of different coffees that it sells to gourmet shops in one$-$pound bags. The

major cost of the coffee is raw materials. However, the company's predominantly automated

roasting, blending, and packing processes require a substantial amount of manufacturing

overhead. The company uses relatively little direct labor. Some of CBI's coffees are very popular

and sell in large volumes, while a few of the newer blends sell in very low volumes.

For the coming year, CBI's budget includes an estimated manufacturing overhead cost of

P$3,000,000.$ CBI assigns manufacturing overhead to products based on direct labor hours. The

expected direct labor cost totals $P600,000,$ which represents $50,000$ hours of direct labor time.

The expected costs for direct materials and direct labor for one$-$pound bags of two of the

company's coffee products appear below.

CBI's controller believes that the company's traditional costing system may be providing

misleading cost information. To determine whether or not this is correct, the controller has

prepared an analysis of the year's expected manufacturing overhead costs, as shown in the

following table:

Data regarding the expected production of Viet Select and Kenya Dark coffee are

presented below. There will be no raw materials inventory for either of these coffees at the

beginning of the year.

To help CBI with its cost allocation problems, you are required to comment on the observation of

CBI's controller. You are also tasked to write a justification with pertinent comparative cost

information using traditional costing and activity$-$based costing approaches

All of the teams must obediently follow the sequence of items presented in their written analysis

of the case paper. This guideline contains the specific items included in the paper, writing

conventions, and a measurement system to evaluate outputs.

The written analysis of the case output must have the following explicit components: Please answer

A$.$ Background of the Study and Issues

This area must show the situation and the problems cited in the case. It must include a

summary of the issues enumerated in the case or observations that deserve further

analysis.