Complete the following questions using Microsoft Excel. No other submission format is allowed. Review the grading rubric to confirm you are meeting the assignment requirements.

Medina Corporation manufactures cruising bicycles and mountain bicycles. Estimated direct labor time to produce each type of bicycle is as follows:

	Cruising	Mountain
Estimated bicycles produced	30,000	20,000
Direct labor hours per bicycle	1	3

Estimated overhead for the two product lines = SAR 900,000

a. Compute the overhead cost assigned to each type of bicycle assuming direct labor hours is used to allocate overhead costs. b. The controller is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the Mountain bicycle product line because of its complexity. He therefore developed the following three activity cost pools and related cost drivers to better understand these costs.

Activity Cost Pools	Expected Use of Cost Drivers	Estimated Overhead Costs
Setting up machines	1,000 setups	SAR 150,000
Assembling	90,000 labor hours	SAR 630,000
Inspection	1,200 inspections	SAR 120,000

Compute the activity-based overhead rates for these three cost pools.

c. Compute the cost that is assigned to each bicycle product line using activity-based costing system, given the following information.

Expected Use of Cost Drivers per Product

	Cruising	Mountain
Number of setups	150	850
Direct labor hours	30,000	60,000
Number of inspections	100	1,100

d. What do you believe the controller should do and why? e. You must show all your work.