Monrovia has decided to switch to an activity-based costing, Ask an Expert

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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 $273,000 7,800 machine hours
Parts management $72,360 108 part numbers

Actual activity for the year for the two models of bicycles were as follows:

Bicycles
Produced Machine
Hours Used Part Numbers
Used
Claim Jumper 380 2,480 62
Gully Runner 1,040 4,960 46

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M971756

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