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Chapter+7+Review+Exercises - ACC 2362 Chapter 7 Review...

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ACC 2362 - Chapter 7 Review Exercises Armstrong Company produces a variety of bicycles. One of its plants produces two bicycles: a mountain model and a racing model. At the beginning of the year, the following data were prepared for this plant: Mountain Racing Units 400,000 125,000 Selling Price $1,200 $1,000 Unit Prime Cost $400 $500 In addition, the following information was provided so that overhead costs could be assigned to each product: Activity Name Activity Driver Mountain Racing Activity Cost Machining Machine hours 250,000 250,000 $10,000,000 Engineering Engineering hours 150,000 100,000 $5,500,000 Packing Packing orders 350,000 50,000 $4,000,000 Armstrong Company uses activity-based costing to calculate product costs. 1) Calculate activity rates for machining, engineering and packing. 2) Calculate the per unit product cost for mountain bikes and racing bikes. 3) Using a plant wide rate using machine hours as the driver calculate the amount of applied overhead. 4) What is the per unit product cost for mountain bikes and racing bikes using a plant wide rate?
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