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 $5,000,000 and uses 500,000 machine hours for the year. Squamish Co. has decided to allocated overheads on the basis of machine hours. At the end of June, Squamish Co. used 7,000 machine hours for manufacturing road bikes, 15,000 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 450,000 2,500,000 Materials pieces Machine 70,000 set 1,000,000 Setups ups Inspections 7,000 700,000 inspection hours Running 40,000 hours 800.000 Machines Total Overhead 5.000.000 Information Road Bike 40 Mountain Bike 120 Hybrid Bike 40 60 50 158 Opening Inventory Produced Inventory Ending Inventory ad 30 70 8 100 ] Squamish Co. estimates the following activities to be of importance and notes the estimated number of units: Activity Base Amount Total Costs Purchase 450,000 2,500,000 Materials pieces Machine 70,000 set 1,000,000 Setups ups Inspections 7,000 700,000 inspection hours Running 40,000 hours 800,000 Machines Total Overhead 5,000,000 Information Road Bike 40 Mountain Bike 120 Hybrid Bike 40 60 50 158 30 70 8 70 100 190 Opening Inventory Produced Inventory Ending Inventory Sold Inventory Sales Price Direct Materials per bike Direct Labour hours Direct Labour costs 5,200 800 4,800 300 4,500 200 10 8 4 20 15 VIEW ENTIRE MESSAGE Reply Forward 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 $5,000,000 and uses 500,000 machine hours for the year. Squamish Co. has decided to allocated overheads on the basis of machine hours. At the end of June, Squamish Co. used 7,000 machine hours for manufacturing road bikes, 15,000 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 450,000 pieces 2,500,000 Materials Machine Setups 70.000 set ups 1.000.000 Inspections 7.000 inspection 700,000 hours Aunning 40,000 hours 800,000 Machines Total Overhead 5,000,000 Mountain Bike 120 50 Hybrid Bike 40 158 70 100 4.800 300 8 190 4.500 200 Information Road Bike Opening Inventory 40 Produced 60 Inventory Ending Inventory 30 Sold Inventory 70 Sales Price 5.200 Direct Materials per 800 bike Direct Labour 10 hours Direct Labour 20 costs Purchase Materials 3.000 pieces) Machine Setups 5,000 set up Inspections (hours) 3,000 Running Machines 5.000 hours) 8 4 15 15 2.000 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 activity base costing