Monrovia Bike Corporation manufactures two models of bicycles: the "Gully Runner" and the "Claim Jumper." In the past, Monrovia had been using a traditional overhead allocation system based on machine hours. Monrovia has decided to switch to an activity-based costing system using two activity cost pools. Information related to the new system is as follows:
- activity estimated overhead cost estimated activity
- Automated assembly $189,000 $ 7,000 machine hours
- parts management $63,000 $ 100 part numbers
actual activity for the year for the two models of bicycles were as follow:
- bicycle machine part
- produced hours used numbers used
- Claim jumper 300 2400 70
- Gully Runner 960 4800 30
Req.
1. If Monrovia was still using its traditional system, how much overhead cost would have been assigned to each Gully Runner bicycle?
2. If Monrovia's actual overhead cost was $285,400, what would total under- or overapplied overhead be for the year under the new activity-based costing system?
3. Under the new activity-based costing system, what amount of overhead cost would Monrovia assign to each Claim Jumper bicycle?