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Ivanhoe Inc. is a distributor and processor of a variety of different blends of coffee. The company buys coffee beans from around the world and roasts, blends, and packages them for resale. Ivanhoe Inc. currently offers 10 different coffees in SUD-gram bags to gourmet shops. The major cost is raw materials; however, there is a substantial amount of manufacturing overhead in the mostly automated roasting and packing process. The company uses relatively little direct labour. Some of the coffees are very popular and sell in large volumes, while a few of the newer blends have very low volumes. Ivanhoe Inc. prices its coffee at total product costs, including allocated overhead, plus a markup of 25%. If prices for certain coffees are signicantly higher than ma rket, the prices are adjusted lower. Data for the 2022 budget include manufacturing overhead of $2.8 million, which has been allocated in the existing costing system based on each product's budgeted direct labour cost. The budgeted direct labour cost for 2022 totals $560,000. Purchases and use of materials {m ostlyr coffee beans] are budgeted to total $5 million. The budgeted prime costs for 500-gram bags of two of the com pany's products are as follows: Direct materials $3.20 $2.80 Direct labour $0.25 $0.25