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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:
actual activity for the year for the two models of bicycles were as follow:
Req. 1. If Monrovia was still using its traditional system, how much overhead cost would have been assigned to each Gully Runner bicycle? 2. If Monrovia's actual overhead cost was $285,400, what would total under- or overapplied overhead be for the year under the new activity-based costing system? 3. Under the new activity-based costing system, what amount of overhead cost would Monrovia assign to each Claim Jumper bicycle?
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