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
Quantity	250,000	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	Activity Cost	Racing	Mountain
Machining	Machine hours	$20,000,000	250,000	250,000
Engineering	Engineering hours	$ 8,000,000	75,000	50,000
Packing	Packing orders	$ 3,500,000	50,000	125,000

Armstrong Company uses activity-based costing to calculate product costs.

Calculate the per unit product cost for a mountain bike.

Calculate the per unit product cost for a racing bike.

Assume Armstrong Company adds 40% to the cost of a mountain bike and 35% to the cost of a racing bike obtain the selling prices. Calculate the selling prices for a mountain bike and a racing bike.

Answer rating: 100% (QA)

Answers of parts are given below Ans a Activity rate for machining 20000000 ... View the full answer