Flying High Incorporated, $($FHI$)$ is a division of the Master Toy Company. FHI makes remote controlled airplanes. During Year $5,$ FHI incurred the following costs in the process of making $6,800$ planes.

Unit level material costs $(6,800$ units x $$60)$ $$408,000$

Unit level labor costs $(6,800$ units x $$70)476,000$

Unit level overhead costs $(6,800$ x $$50)340,000$

Depreciation cost of manufacturing equipment $68,000$

Other manufacturing overhead $136,000$

Inventory holding costs $394,000$

Allocated portion of the Master Toy Company$$s facility$-$level costs $618,000$

Total cost $ $2,440,000$

When completing this requirement, use the sales price computed in Requirement a$.$ Use the contribution margin format to prepare an income statement based on historical cost data. Prepare a second income statement that reflects the relevant cost data that Master Toy should consider in a segment elimination decision.

Note: Amounts to be deducted and losses should be entered as negative values.

Statement Historical Cost data Relevant Cost Data

Revenue

Less variable costs

Unit$-$level materials costs

Unit$-$level labor costs

Unit$-$level overhead costs

Contribution margin

Depreciation costs of manufacturing equipment

Opportunity cost

Other manufacturing overhead cost

Inventory holding costs

Allocated facility$-$level administrative costs

Net loss

Contribution to Master Toy profitability