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 900 Route 66s, 1.900 Main Streets, and 4,800 Alley Cats and had the following revenues and expenses: PICKLE MOTORCYCLES, INC. Income Statement Route 66 Main Street Alley Cat Total Sales revenue $7,300,000 $11,800, eee $9,100,000 $28,200,000 Direct costs Direct materials 2,980,000 5,200,000 4,500, eee 12,600, eee Direct labor 284,000 480,000 1,070,000 1,834,000 Variable overhead Machine setup 472,5ee Order processing 1,120,000 Warehousing costs 1,687,500 Energy to run machines 690,000 Shipping 850, eee Contribution margin $ 8,946,000 Fixed overhead Plant administration 1,830, eee Other fixed overhead 2,780, eee Gross profit $ 4,336, eee PMI's chief financial officer (CFO) hired a consultant to recommend cost allocation bases. The consultant recommended the following: PMI's chief financial officer (CFO) hired a consultant to recommend cost allocation bases. The consultant recommended the following: Activity Level Activity Cost Driver Route 66 Main Street Alley Cat Setting up 25 Number of production runs 35 45 machines Processing orders Number of sales orders received 400 60e 600 Warehousing Number of units held in 230 150 370 inventory Using energy Machine-hours 10,000 14, eee 22, see Shipping Number of units shipped 1,100 3,900 12, eee The consultant found no basis for allocating the plant administration and other fixed overhead costs and recommended that these not be applied to products. be applied to products Required: o. Using machine hours to allocate production overhead, complete the income statement for Pickle Motorcycles. (See the 'usin energy" activity for machine hours.) Do not attempt to allocate plant administration or other fixed overhead. (Round your variab overhead rate to 2 decimal places and your final answers to the nearest whole dollar amount.) PICKLE MOTORCYCLES Income Statement Route 66 Main Street Alley Cat Total $ 7,300,000 $ 11,800,000 $9,100,000 $ 28,200,000 2.900.000 284,000 5,200,000 480.000 4.500.000 1.070,000 12,600,000 1,834,000 Sales revenue Direct costs Direct material Direct labor Variable overhead Contribution margin Fixed overhead Plant administration Other fuced overhead Gross profil $ 4,116,000$ 6,120,000 $3,530,000 $ 13,766,000 1,830,000 2.780,000 $ 4,336,000 b. Complete the income statement using the bases recommended by the consultant (Do not round intermediate calculations.) PICKLE MOTORCYCLES Income Statement Route 66 Main Street Back Alley Total $ 7,300,000 $ 11,800,000 $9,100,000 $ 28,200,000 2,900,000 284,000 5,200,000 480,000 4,500,000 1,070,000 12,600,000 1,834,000 Sales revenue Direct costs Direct material Direct labor Variable overhead Machine setup Order processing Warehousing costs Energy to run machines Shipping Contribution margin Fixed overhead Plant administration Other food overhead Gross prot 472,500 1,120,000 1,687,500 690,000 850,000 1,830,000 2,780,000 $ 4,336,000