"Choosing an Activity-Based Costing System"

Theresa M. Odom

ACC 310

Instructor Ivan Makarov

May 20, 2014

Choosing an Activity-Based Costing System

9-39. Choosing an Activity-Based Costing System

Pickle Motorcycles, Inc. (PMI), manufactures three motorcycle models: a cruising bike (Route 66), a street bike (Main Street), and a starter model (Alley Cat). Because of the different materials used, production processes for each model differ significantly in terms of machine types and time requirements. Once parts are produced, however, assembly time per unit required for each type of bike is similar. For this reason, PMI allocates overhead on the basis of machine-hours. Last year, the company shipped 1,000 Route 66s, 4,000 Main Streets, and 10,000 Alley Cats and had the following...