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Question 6 (Total 13 marks) Sturdy Bikes manufactures mountain bikes and road bikes. The per unit data for mountain bikes and road bikes is as follows: Selling price Direct materials Direct labour (at $20 per direct labour hour) Direct labour hour Variable manufacturing overhead Fixed manufacturing overhead Mountain Bike $500 $100 $20 1 hour $30 $100 Road Bike $1,500 $250 $40 2 hours $60 $100 Required: 1. Sturdy Bikes received an inquiry from Brown Company who has offered to purchase 5,000 units of mountain bikes at $450 per unit. If Sturdy Bikes accepts this order, it will need to spend an additional $20 per unit to inspect each mountain bike due to additional specifications requested by Brown Company. Assume that the present sales of Sturdy Bikes will not be affected and there is spare capacity, should Sturdy Bikes accept the special order? Explain by showing your calculations. 2. Sturdy Bikes can sell the mountain bike for $600 per unit if it spends another $150 per unit to upgrade the bike. If there is spare capacity, should Sturdy Bikes process the mountain bike further? Explain by showing your calculations. 3. Recently, Sturdy Bikes experienced a reduction in skilled labourers and now has a maximum of 10,000 direct labour hours available for the period. The market demand for mountain bikes is 2,000 units and road bikes is 4,000 units. How many mountain bikes and road bikes should Sturdy Bikes produce? Please show detailed calculations. (4 + 3+ 6 = 13 marks) Start your answer here