Prepare incremental analysis for sell-or-process decision

Assignment Help Accounting Basics

Reference no: EM13257420

Donkey Bikes could sell its bicycles to retailers either assembled or unassembled. The cost of an unassembled bike is as follows.

DirectMaterials    $150
Directlabor            70
Variable Overhead(70% of directlabor)   49
Fixedoverhead (30% of directlabor)       21
Manufacturingcost perunit                   290

The unassembled bikes are sold to retailers at $400 each.

Donkey currently has unused productive capacity that isexpected to continue indefinitely; management has concluded thatsome of this capacity can be used to nassemble the bikes and sellthem at $450 each. Assembly the bikes will increase directmaterials by $5 per bike, and direct labor by $20 per bike. Additional variable overhead will be incurred at the normalrates,but there will be no additional fixed overhead as a result ofassembling the bikes.

Instructions

a. Prepare an incremental analysis for n the sell-or-process further decision
b. Should donkey sell or process further? why or why not

Reference no: EM13257420

Questions Cloud

Analyze the rhetorical strategies : Essay or article and analyze the rhetorical strategies and appeals employed to persuade readers - Describe the writer's use of the technique by including at least three examples (quotations) of each, making sure to integrate them properly.

Compute the ph of a buffer solution made by mixing : Calculate the pH of a buffer solution made by mixing 49 ml of a 0.07 M ammonia solution with 52 ml of a 0.10 M ammonium nitrate solution. Give the pH to two decimal places.

Question regarding the balance sheet : The balance sheet is useful for analyzing all of the following except _______________.

What is the cash ratio : Your firm has cash of $3,800, accounts receivable of $9,600, inventory of $33,100, and net working capital of $1,100. What is the cash ratio?

Prepare incremental analysis for sell-or-process decision : The unassembled bikes are sold to retailers at $400 each. Prepare an incremental analysis for n the sell-or-process further decision

What would be your estimate of shelbys cost of equity : On the basis of the results of parts a through c, what would be your estimate of Shelby's cost of equity? Assume Shelby values each approach equally.

Explain how many si atoms are there for each ai atom : Al is added to Si to give an extrinsic semiconductor with a conductivity of 2 ( cm)^-1 How many Al atoms are added per cm^3? How many Si atoms are there for each AI atom

Making a statement of cash flows : Prepare a statement of cash flows in good form using the indirect format.

Explain the use of the random generator command rand : The number of random numbers it takes before the mean of those numbers is within 0.01 and 0.5. The number of random numbers it takes before a number between 0.8 and 0.85

User Account

All Pages