Monrovia Bike Corporation manufactures one model of bicycles: the Gully Runner. Monrovia has decided to utilize an activity-based costing system for the current year and calculated the following estimates: Activity Estimated Overhead Cost Estimated Activity Automated Assembly...... $189,000 7,000 machine hours Parts management.......... $63,000 100 part numbers Calulate the Activity Rate for the Parts Management activity that should be used during the year.

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facundobuzzetti facundobuzzetti · Answer 1 · 2021-03-30T20:50:06+02:00

Answer:

Parts management= $630 per part

Explanation:

Giving the following information:

Activity Estimated Overhead Cost Estimated Activity Automated Assembly $189,000 7,000 machine hours

Parts management $63,000 100 part numbers

To calculate the activity rate, we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Parts management = 63,000 / 100

Parts management= $630 per part