An exercise company manufactures two exercise bikes BK 200 and BK 300. The

following information is available to manufacture 500 BK 200 and 700 BK 300 for

June, 2021.

	BK 200	BK 300
Direct materials per unit	$110	$130
Direct labour per unit	$35.5	$60
Production (machine hours)	250	350
Setup (production runs)	10	70

Overheard cost incurred for the month of June:

Setup costs	$128,000
Production costs	$111,000
Total	$239,000

1. Using plantwide rate based on total direct labour cost compute the total cost of

each bike in total and per unit.

2. Using activity based costing compute the total costs of each bike in total and per

unit.

3. For the year the company incurred $ 500,000 of production costs and $750,000 of setup costs. There were 3,000 machine hours and 500 setups. Compute the amount of over or under allocated overhead for setup and production costs (assuming rates computed in b are the same for the full year. Close out any over or under-allocated amounts to cost of goods sold.