Raymond Company produces a variety of bicycles. One of its plants produces two bicycles: a mountain model and a racing model. At the beginning of the year, the following data were prepared for this plant:

In addition, the following information was provided so that overhead costs could be assigned to each product:

Raymond Company uses activity-based costing to calculate product costs.

Required:

A. Calculate the per unit product cost for a mountain bike. B. Calculate the per unit product cost for a racing bike. C. Assume Armstrong Company adds 35% to the cost of a mountain bike and 40% to the

cost of a racing bike obtain the selling prices. Calculate the selling prices for a mountain bike and a racing bike.

	Mountain	Racing
Quantity	220,000	125,000
Selling Price	$1,200	$1,000
Unit Prime Cost	$ 400	$ 450

Activity Name	Activity Driver	Activity Cost	Mountain	Racing
Machining	Machine hours	$20,000,000	250,000	250,000
Engineering	Engineering hours	$ 8,000,000	75,000	50,000
Packing	Packing orders	$ 3,500,000	50,000	125,000