managerial accounting

3. Cycle Motion Co, manufactures bicycles and unicycles. The company is considering changing from traditional overhead allocation to activity costing in the past you this company produced 2,000 bicycles and 500 unicycles, and incurred $175,100 of manufacturing overed. The predetermined overhead rate is $17.81 per directo hour. Based on this rate, the unit cost of each item produced for the year inchided 571.24 of manufacturing overhead, resulting in the following unico: Bicycles Unicycles Direct materials $ 14.00 $ 17.00 Direct labour 18.00 22.00 Manufacturing overhead 71.24 Total S103.24 $110.24 The company controller analyzed the past year's overhead costs for cost pools and activity drivers. She discovered that the overhead could be assigned to the cost pools and applied to the product using the following activities: Activity by product Annual Overhead activity cost Activity driver volume Bicycles Unicycles Setups $30,000 Number of setups 75 60 15 Materials handling $80,600 Weight of materials (kg) 12,400 9.200 3.200 Equipment operations $67,500 Machine hours 45,000 25,000 20,000 Assuming the activity-based costing is more accurate, which product was under-costed using the traditional allocation of manufacturing overhead, and by how much was it under- costed per unit? a) Unicycles were under-costed by $3.36 per unit. b) Bicycles were under-costed by $10.59 per unit. c) Unicycles were under-costed by $42.36 per unit. d) Bicycles were under-costed by $42.84 per unit