For this semester's course project, you have to analyze the following case:

• Brinkers' Bicycle Shop:A Special Order Decision

Your analysis should include the following steps, to the extent logical and possible, given the character of the case:

• Identify and describe or explain the problem that the managers of the organization in question are encountering.What has happened to make the managers realize that the problem has arisen?What is the likely cause of the problem?Why is the problem important?
• Analyze the problem, using tools and concepts that we have been studying, as well as your general business and management knowledge.Analyze the situation from a quantitative perspective, using the data available in the case, and from operational, qualitative and strategic perspectives.Use diagrams/tables to conduct your analysis and to report your findings.Your analysis should show that you can use these tools and concepts and the language of management accounting correctly and articulately.
• Draw conclusions regarding the nature of the problem and possible solutions, and develop recommendations for the managers in question.

Managerial Accounting (AF 211)

Brinkers' Bicycle Shop:A Special Order Decision

"This offer is the greatest thing that's happened to us since we started this business!"

-- Hans "Five-speed" Brinker, founding partner, Brinkers' Bicycle Shop

"Just slow down a minute, Five ... there could be a lot more to this decision than first meets the eye ..."

-- Wilbur Brinker, founding partner, Brinkers' Bicycle Shop

Hans and Wilbur Brinker turned their passion for tinkering with bikes, building customized bicycles, and racing into their own bicycle shop just two years ago.They currently produce:a standard model five-speed bicycle for amateur touring and racing, customized versions of that bicycle for more serious racers, and customized mountain and sand bikes.The standard model has become well known for its value, that is, for its high quality and reasonable price.It now accounts for nearly half of the shop's monthly sales.The following table contains details regarding the standard model's sales, costs and revenues.

Per Total Bicycle per Month Current sales ( bicycles per month ) 25 Sales revenues $300 $7, 500 Variable costs ( direct materials )* $ 100 $2, 500 Contribution margin $200 $5, 000 *Frame parts , brake system , chains , tires , seat , handle bars , pedals , etc . ( labor is treated as a fixed / capacity cost )