Cullumber Bikes could sell its bicycles to retailers either assembled or unassembled. The cost of an unassembled bike is as follows. Direct materials $126 Direct labor 60 Variable overhead (70% of direct labor) 42 Fixed overhead (30% of direct labor) 18 Manufacturing cost per unit $246 The unassembled bikes are sold to retailers at $406 each. Cullumber has unused productive capacity that is expected to continue indefinitely; management has concluded that some of this capacity could be used to assemble the bikes and sell them at $449 each. Assembling the bikes will increase direct materials by $5 per bike and direct labor by $10 per bike. Additional variable overhead will be incurred at the normal rates, but there will be no additional fixed overhead as a result of assembling the bikes. (a) Prepare an incremental analysis for the sell-or-process-further decision. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter O for the amounts.)
Cullumber Bikes could sell its bicycles to retailers either assembled or unassembled. The cost of an unassembled bike is as follows. Direct materials $126 Direct labor 60 Variable overhead (70% of direct labor) 42 Fixed overhead (30% of direct labor) 18 Manufacturing cost per unit $246 The unassembled bikes are sold to retailers at $406 each. Cullumber has unused productive capacity that is expected to continue indefinitely; management has concluded that some of this capacity could be used to assemble the bikes and sell them at $449 each. Assembling the bikes will increase direct materials by $5 per bike and direct labor by $10 per bike. Additional variable overhead will be incurred at the normal rates, but there will be no additional fixed overhead as a result of assembling the bikes. (a) Prepare an incremental analysis for the sell-or-process-further decision. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter O for the amounts.)
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 4EA: Zena Technology sells arc computer printers for $55 per unit. Unit product costs are: A special...
Related questions
Question
Transcribed Image Text:Cullumber Bikes could sell its bicycles to retailers either assembled or unassembled. The cost of an unassembled
bike is as follows.
Direct materials
$126
Direct labor
60
Variable overhead (70% of direct labor)
42
Fixed overhead (30% of direct labor)
18
Manufacturing cost per unit
$246
The unassembled bikes are sold to retailers at $406 each.
Cullumber has unused productive capacity that is expected to continue indefinitely; management has concluded
that some of this capacity could be used to assemble the bikes and sell them at $449 each. Assembling the bikes
will increase direct materials by $5 per bike and direct labor by $10 per bike. Additional variable overhead will be
incurred at the normal rates, but there will be no additional fixed overhead as a result of assembling the bikes.
(a)
Prepare an incremental analysis for the sell-or-process-further decision. (Enter negative amounts using
either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field
blank. Enter 0 for the amounts.)
Net Income
Process
Increase
Sell
Further
(Decrease)
$
$
$
2$
(>
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Essentials of Business Analytics (MindTap Course …
Statistics
ISBN:
9781305627734
Author:
Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Essentials of Business Analytics (MindTap Course …
Statistics
ISBN:
9781305627734
Author:
Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning