assume Due uses a traditional costing method and applies a single, predetermined overhead rate based on the number of assembly stations. 3. What is the total cost per bike of the Mountain Bike? 4. If Due uses traditional costing-compared to activity - based costing - would the Mountain Bike be over - costed or under-costed? Only typed solution Due Co. manufactures two bicycles, the Mountain Bike and the Street Racer, and anticipates producing4,000 Mountain Bikes and 2,000 Street Racers.The direct material cost and direct labor cost for each bike are:Mountain BikeStreet RacerMountain BikeStreet RacerDirect Materials$60$30Due's budgeted overhead cost of $1,070,000 is based on the following:• Set-up procedures$ 200,000• Assembling stations$ 600,000• Finishing$ 120,000• Shipping$ 150,000The following activities are needed to manufacture the bikes:3,0002,000Direct Labor$120$80Set-up Procedures Assembling Stations Finishing4,0002,0006,0004,000Shipping2,0001,000

Traditional costing is a method that allocates indirect costs to produce products.It is an…

Answered: Due Co. manufactures two bicycles, the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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assume Due uses a traditional costing method and applies a single, predetermined overhead rate based on the number of assembly stations. 3. What is the total cost per bike of the Mountain Bike? 4. If Due uses traditional costing-compared to activity - based costing - would the Mountain Bike be over - costed or under-costed?

Only typed solution

Due Co. manufactures two bicycles, the Mountain Bike and the Street Racer, and anticipates producing
4,000 Mountain Bikes and 2,000 Street Racers.
The direct material cost and direct labor cost for each bike are:
Mountain Bike
Street Racer
Mountain Bike
Street Racer
Direct Materials
$60
$30
Due's budgeted overhead cost of $1,070,000 is based on the following:
• Set-up procedures
$ 200,000
• Assembling stations
$ 600,000
• Finishing
$ 120,000
• Shipping
$ 150,000
The following activities are needed to manufacture the bikes:
3,000
2,000
Direct Labor
$120
$80
Set-up Procedures Assembling Stations Finishing
4,000
2,000
6,000
4,000
Shipping
2,000
1,000

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