(Body) ~ 12 A " A B I U D AV ... Question 2. (30 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 $2,000,000 and uses 200,000 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 6,000 machine hours for manufacturing road bikes, 14,000 machine hours for manufacturing mountain bikes and 13,000 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 400,000 pieces 300,000 Machine Setups 70,000 set ups 600,000 Inspection 7,000 inspection 700,000 hours Running Machines 40,000 hours 400,000 Total Overhead 2,000,000 Total Overhead 2,000,000 Mountain Bike 100 Hybrid Bike 50 132 20 10 20 2 60 $4,000 $300 180 $3,000 $200 Information Road Bike Opening Inventory 30 Produced Inventory 40 Ending Inventory 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 using the activity based costing method