Bikes "R" Us created a new company called 'Scooters "R" Us'. This company manufactures scooters instead of bikes.

In its first year of operations, i.e., for the year ended December 31, 2022, the new company incurred the following costs:

Variable Costs per Unit
Direct Materials	$10.00
Direct Labor	$4.00
Variable manufacturing overhead	$2.00
Variable Selling and Administrative Expenses	$6.00

Fixed Costs per Year
Fixed Manufacturing Overhead	$500,000
Fixed Selling and Administrative Expenses	$200,000

Below is the sales data for Scooters "R" Us for 2022:
Number of Scooters Produced	20,000
Number of Scooters Sold	20,000
Unit Sales Price	$100.00

Instructions:

Using a spreadsheet with formulas, saved in Microsoft Excel format, complete the following for Parts 1 and 2 below:

PART 1:

Use the information above to answer parts (a) - (d) for Part 1.

(a) Create the CVP Income Statement for Scooters "R" Us. Be sure to use the proper format (i.e., with proper heading - Company Name, Financial Statement Name, Period, etc.)

(b) Compute the contribution margin ratio for Scooters "R" Us (Round to two decimals)

(c) Compute the degree of operating leverage (Round to two decimals)

(d) Compute the break-even point in sales dollars (Round to two decimals)

NOTE: for Part 1(a), you must use at least 3 formulas, for Part 1(b), 1(c), and 1(d) you must use at least 1 formula each

PART 2:

Assume that in 2022, Scooters "R" Us sold 18,000 scooters and produced 20,000 scooters.

(a) What is the manufacturing cost per unit using variable costing?

(b) What is the manufacturing cost per unit using absorption costing?

(c) Prepare a variable costing income statement for 2022. Be sure to use the proper format (i.e., with proper heading - Company Name, Financial Statement Name, Period, etc.)

(d) Prepare an absorption costing income statement for 2022. Be sure to use the proper format (i.e., with proper heading - Company Name, Financial Statement Name, Period, etc.)

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