Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Same question with multiple parts. Please help!! Pickle Motorcycles, Inc. (PMI), manufactures three motorcycle models: a cruising bike (Route 66), a street bike (Main Street).

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

Same question with multiple parts. Please help!!

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 1,200 Route 66s, 1,800 Main Streets, and 5,100 Alley Cats and had the following revenues and expenses. PICKLE MOTORCYCLES, INc. Income Statement Route 66 Alley Cat $ 9,400,000 Total Main Street Sales revenue Direct costs Direct materials $8,100, e00 $ 29, 200,0ee $11,700,000 5,100,000 2,700,000 3,600,000 11,400,000 1,846,000 Direct labor 289,000 477,e00 1,080,000 Variable overhead Machine setup Order processing Warehousing costs Energy to run machines Shipping Contribution margin 475.000 1,350,000 1,679,000 720,000 800, 000 S 10,930.0ee Fixed overhead Plant administration Other fixed overhead 1, 38,000 2,890,000 Gross profit 6,210,000 PMI's chief financial officer (CFO) hired a consultant to recommend cost allocation bases. The consultant recommended the following. Activity Level Main Street Activity Setting up machines Processing orders Warehousing Using energy Shipping Cost Driver Route 66 Alley Cat Number of production runs Number of sales orders received 20 35 500 600 Number of units held in inventory Machine-hours 150 210 370 10,000 14, e00 4,100 24,000 Number of units shipped 900 11,000 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 Motorcycles's management? Complete this question by entering your answers in the tabs below. Required A Required B Required C 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. (Round your variable overhead rate to 2 decimal places and your final answers to the nearest whole dollar amount. Input all amounts as positive values.) PICKLE MOTORCYCLES Income Statement Main Street Route 66 Alley Cat Total 11,700 000 Sales revenue 8,100,000 9 400.000 29 200,000 Direct costs Direct material 2.700.000 5.100,000 3.600 000 11.400,000 Direct labor 289,000 477.000 1.080.000 1846.000 Variable overhead Contribution margin 5,111,000 S 4.720 000 S 6,123,000 $ 15.954.000 Fixed overhead Plant administration 1,830.000 Other foced overhead 2,890.000 Gross profit 6,210,000 Required C Required B Required A Complete the income statement using the bases recommended by the consultant. (Do not round i Input all amounts as positive values.) PICKLE MOTORCYCLES Income Statement Total Back Alley Main Street Route 66 $ 29,200,000 S 9,400,000 $ 11,700,000 $ 8,100,000 Sales revenue Direct costs: Direct material 11.400,000 2,700,000 3,600,000 5,100,000 Direct labor 1,846,000 289.000 477.000 1,080,000 Variable overhead: Machine setup 475.000 Order processing 1,350,000 Warehousing costs 1,679,000 Energy to run machines 720,000 Shipping 800,000 Contribution margin Fixed overhead: Plant administration 1,830,000 Other fixed overhead 2,890 000 S 6,210,000 Gross profit ded by the consultant. c. How might activity-based costing result in better decisions by Pickle Motorcycles's management? Complete this question by entering your answers in the tabs below. Required A Required B Required C How might activity-based costing result in better decisions by Pickle Motorcydes's management? OThe activity-based costing method provides a more detailed breakdown of the costs. The activity-based costing method provides a consolidated summary of the costs.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting and auditing research tools and strategies

Authors: Thomas Weirich, Thomas Pearson, Natalie Tatiana

8th edition

9781118806487, 1118027078, 1118806484, 978-1118027073

More Books

Students also viewed these Accounting questions

Question

What do you think most people would do in this situation?

Answered: 1 week ago

Question

=+5. What do you want them to think?

Answered: 1 week ago

Question

=+What the product does for the end-user.)

Answered: 1 week ago