Turner Manufacturing Company makes a partially completed assembly unit LO5 that it sells for \($50\) per unit. Normally, 35,000 units are sold each year. Variable unit cost data on the

assembly are as follows:

The company is now using only 75% of its normal capacity; it could fully use its normal capacity by processing the assembly further and selling it for \($58\) per unit. If the company does this, material and labor costs will each increase by \($2\) per unit and variable overhead will go up by \($1\) per unit. Fixed costs will increase from the current level of \($125,000\) to \($165,000\)  Prepare an analysis showing whether Turner should process the assemblies further.

Transcribed Image Text:

Direct material Direct labor. Variable manufacturing overhead. $12 7 9