Competition Bikes Inc. has retooled and is making both the CarbonLite and the Titanium frame bikes. The company vice president directed that a cost study be conducted, and an activity-based costing analysis was undertaken in one of the company plants. After the study, a breakeven analysis was completed along with target profit projections.
For this task, you will be using the attached Competition Bikes Inc. storyline.
Note: Be sure to submit a copy of your Excel workbook when submitting your JET2 Task 4 work. The evaluator will need a copy of your data to ensure correct evaluation.
A. Prepare a summary report to the vice president of the company in which you do the following:
1. Recommend whether the company should change its costing method to activity-based costing.
2. Based on an evaluation of cost-volume-profit, do the following:
a. Analyze the breakeven point for Competition Bikes Inc. with regard to sales units and sales dollars for both CarbonLite and Titanium bikes.
b. In one paragraph in the summary report describe the impacts to the breakeven point if company management needed to add $50,000 in fixed costs to the production facility and the direct materials had a 10% cost increase.
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