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 1,100 Route 66s, 1.900 Main Streets, and 5,000 Alley Cats and had the following revenues and expenses DICKLE MOTORCYCLES, INC. Income Statement Route 66 Main Street Alley Cat Total Sales revenue $7,700,000 $10,500,000 $ 9,700,000 $ 27,900,000 Direct costs Direct materials 3,200,000 5,000,000 4,200,000 12,400,000 Direct labor 286,000 479.000 1,030,000 1.795,000 Variable overhead Machine setup 450,000 Order processing 1,440.000 Warehousing costs 3,933,750 Ensy to run machines 85,000 Shipping 205.000 Contribution margin 3 8,292,250 Flved overhead Plant administration 1,760,000 other fixed overhead 2.950.000 Gross profit 32,602,250 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 machines Number of production runs 20 30 4 Processing orders Number of sales orders received Warehousing Number of units held in inventory 200 240 410 Using energy Machine-hours 19,690 18,000 24.000 Shipping Number of units shipped 1,000 4,100 9.000 400 600 600 The consultant found no basis for allocating the plant administration and other fixed overhead costs and recommended that these not be applied to products, Required: a. Using machine hours to allocate production overhead, complete the income statement for Pickle Motorcycles. (See the using energy activity for machine-hours) Do not attempt to allocate plant administration or other fixed overhead b. Complete the income statement using the bases recommended by the consultant c. How might activity-based costing result in better decisions by Pickle Motorcycless management? Complete this question by entering your answers in the tabs below