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Zachary Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racing bikes with limited sales. Zachary produces and sells only 7,400 bikes each year. Due to the low volume of activity. Zachary is unable to obtain the economies of scale that larger producers achieve. For example, Zachary could buy the handlebars for $38 each; they cost $41 each to make. The following is a detailed breakdown of current production costs: Item Unit Cost: Total Unit level costs Materials $13 $133,2 Labor 10 T4 , G Di] Overhead 3 22 , 200 Allocated facility-level coats T4, 000 Total $41 5303.400 Alter seeing these guresI Zachary's president remarked that it would be foolish for the company to continue to produce the handlebars at $41 each when it can buy them for $38 each. Required Calculate the total relevant cost. Do you agree with the president's conclusion? Total relevant cost Do you agree with the president's conclusion? Fanning Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. FANNING COMPANY Income Statements for the Year 2018 Segment A B C Sales $ 164,000 $240, 000 $247,000 Cost of goods sold (128, 000) (92 , 000) (78, 000) Sales commissions (19, 000) (24, 000) (24, 000) Contribution margin 17,000 124, 000 145,000 General fixed operating expenses (allocation of president's salary) (35, 000) (39, 000) (26, 000) Advertising expense (specific to individual divisions) (5,000) (11, 000) Net income $ (23, 000) $ 74,000 $119 , 000 Required a. Prepare a schedule of relevant sales and costs for Segment A. b. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. Complete this question by entering your answers in the tabs below.Income Statements for the Year 2018 Segment A B C Sales $ 164,000 $240, 000 $247, 000 Cost of goods sold (128, 000) (92, 000) (78 , 000) Sales commissions (19, 000) (24, 000) (24, 000) Contribution margin 17,000 124,000 145,000 General fixed operating expenses (allocation of president's salary) (35, 000) (39, 000) (26 , 000) Advertising expense (specific to individual divisions) (5,000) (11, 000) 0 Net income $ (23, 000) $ 74,000 $119 , 000 Required a. Prepare a schedule of relevant sales and costs for Segment A. b. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a schedule of relevant sales and costs for Segment A. Relevant Rev. and Cost items for Segment A Effect on incomeRequired a. Prepare a schedule of relevant sales and costs for Segment A. b. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. Complete this question by entering your answers in the tabs below. Required A Required B Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. FANNING COMPANY Comparative Income Statements for the Year 2018 Decision Keep Seg. A Eliminate Seg. A Sales Cost of goods sold Sales commissions Contribution margin General fixed operating expenses Advertising expense Net Income