I Question 2. (26 marks) Squamish Co. makes three product-road bikes, mountain bikes and hybrid bikes. The road bikes are a low volume product that is more specialized while the mountain bikes and hybrid bikes are of higher volume and easier to manufacture. Squamish Co allocated manufacturing overhead costs to the three products for the month of May. Squamish Co. has an estimated overhead cost of $4,000,000 and uses 400,000 machine hours for the year. Squamish Co. has decided to allocated overheads on the basis of machine hours At the end of May, Squamish Co used 5,000 machine hours for manufacturing road bikes, 15,000 machine hours for manufacturing mountain bikes and 20,000 hours for manufacturing hybrid bikes. Squamish Co, estimates the following activities to be of importance and notes the estimated number of units: Activity Base Amount Total Costs Purchase Materials 300,000 pieces 1,500,000 Machine Setups 50,000 set ups 1,000,000 Inspections 8,000 inspection 800,000 hours Running Machines 350,000 hours 700,000 Total Overhead 4,000,000 Mountain Bike 100 20 20 60 $4,000 $300 Hybrid Bike 50 132 2 180 $3,000 $200 Information Road Bike Opening Inventory 30 Produced Inventory 40 Ending Inventory 10 Sold Inventory 60 Sales Price $5,000 Direct Materials per $800 bike Direct Labour hours 10 Direct Labour costs $20 Purchase Materials 3,000 (pieces) Machine Setups (set 5,000 ups) Inspections (hours) 3,000 Running Machines 5,000 (hours) 8 $15 2,000 4 $15 1,000 2,500 3,000 4,000 4,000 1,000 3,000 Part A: Given the following information prepare a schedule that calculates the full cost of the road bike, mountain bike and hybrid bike. Part B: Prepare an income statement for York Co. For the month of May using traditional costing method and the activity-based costing method if 60 road bikes, 60 mountain bikes and 180 hybrid bikes were sold. The Company incurred total selling costs of $20,000, paid rent of $10,000 and incurred marketing costs of $8,000