Sheet1Without contractPer unitNumber of BicyclesTotal costsVariable costs Manufacturing $2602,000$520,000 Non-manufacturing $502,000$100,000 Total variable costs $310$620,000Fixed costs Manufacturing $1282,000$256,000 Nonmanufacturing $1482,000$296,000Total fixed costs $552,000

Total cost$1,172,000VC manufacturing cut40%VC manufacturing$156

VC nonmanufacture cut60%VC non manufacturing$20

Total VC$176

Contract

Variable costs:Per unitNumber of BicyclesTotal costsFor the bikes assembled by KCSB $3101,200$372,000For the bikes not assembled by KCSB $176800$140,800 Total variable costs $512,800Fixed costs Manufacturing [@85% = (1 15%)] $217,600 Nonmanufacturing (unchanged) $296,000Total fixed costs $513,600

Total cost $1,026,400

Unit Cost182Part BWithoutContractAcceptOfferRevenue: From regular bicycles$1,260,000$1,260,000 From racing bicycles0.0$704,000Total revenue $1,260,000$1,964,000

Costs: Variable costs From regular bicycles$620,000$512,800 Payment to supplier0.0$104,000 For racing bicycles (manufacturing)0.0$512,000 For racing bicycles (marketing)0.0$22,400 Total variable cost $620,000$1,151,200 Fixed costs$552,000$552,000Total cost $1,172,000$1,703,200Profit $88,000$260,800Sell regular$630sell racing$8,800

cost of production per unit VC manufacture$6,400VC marketing per unit$280

Number regular status quo2000Number regular offer1200Number racing80

Sheet2ProductProductProductTotalAlphaBetaGammaSales revenue $6,500$5,300$5,300$17,100Less variable costs Manufacturing $3,900$3,710$3,180$10,790Marketing $260$159$159$578Total variable cost $4,160$3,869$3,339$11,368Contribution margin$2,340$1,431$1,961$5,732Less fixed costs:Manufacturing$1,375Marketing$732Administrative $654Total fixed costs $2,761Operating profit $2,971

VC manufactureAlpha60%Beta70%Gamma60%

VC marketingAlpha4%Beta3%Gamma3%

Sheet3