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 2,100 Main Streets, and 5,200 Alley Cats and had the following revenues and expenses PICKLE MOTORCYCLES, INC Income Statement Route 66 Main Street Alley Cat Sales revenue Direct costs $ 7,900,000 11,700,000 S 9,800,000 $ 29,400,000 Direct materials Direct labor 4,900,000 478,000 2,700,000 3,800,000 1,090,000 11,400,000 1,859,000 291,000 Variable overhead 495,000 1,530,000 1,767,000 782,000 608,000 $ 10,959,000 Machine setup Order processing Warehousing costs nergy to run machines Contribution margin Fixed overhead Plant administration Other fixed overhead 1,710,000 2,830,000 6,419,000 Gross profit PMI's chief financial officer (CFO) hired a consultant to recommend cost allocation bases The consultant recommended the following Level Cost Driver Alley Cat Setting up machines Processing orders Number of production runs Number of sales orders received Number of units held in inventory 20 400 150 12,000 1,000 30 700 230 14,000 ,200 40 600 380 20,000 10,000 Using energy Number of units shipped The consultant found no basis for allocating the plant administration and other fixed overhead costs and recommended that these not be applied to products