Monrovia Bike Corporation manufactures two models of bicycles: the "Gully Runner" and the "Claim Jumper." In the past, Monrovia had been using a traditional overhead allocation system based on machine hours. Monrovia has decided to switch to an activity-based costing system using two activity cost pools. Information related to the new system is as follows:
Activity Estimated Overhead Cost Estimated Activity
Automated assembly $273,000 7,800 machine hours
Parts management $72,360 108 part numbers
Actual activity for the year for the two models of bicycles were as follows:
Bicycles
Produced Machine
Hours Used Part Numbers
Used
Claim Jumper 380 2,480 62
Gully Runner 1,040 4,960 46