Question

Monrovia Bike Corporation manufactures one model of bicycles: the Gully Runner. Monrovia has decided to utilize an activity-based costing system for the current year and calculated the following estimates: Activity Estimated Overhead Cost Estimated Activity Automated Assembly...... $189,000 7,000 machine hours Parts management.......... $63,000 100 part numbers Calulate the Activity Rate for the Parts Management activity that should be used during the year.

Answer 1

Parts management= $630 per part

Step-by-step explanation:

Giving the following information:

Activity Estimated Overhead Cost Estimated Activity Automated Assembly $189,000 7,000 machine hours

Parts management $63,000 100 part numbers

To calculate the activity rate, we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Parts management = 63,000 / 100

Parts management= $630 per part