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Carla Vista Garden recently opened her own basketweaving studio. She sells finished baskets in addition to selling the raw materials needed by customers to weave
Carla Vista Garden recently opened her own basketweaving studio. She sells finished baskets in addition to selling the raw materials needed by customers to weave baskets of their own. Unfortunately, owing to space limitations, Carla Vista is unable to carry all the varieties of kits originally assembled and must choose between two basic packages. The Basic Kit includes undyed, uncut reeds (with dye included) for weaving one basket. This basic package costs Carla Vista $14 and sells for $26. The second kit, called Stage 2, includes cut reeds that have already been dyed. With this kit the customer need only soak the reeds and weave the basket. Carla Vista produces the Stage 2 kit by using the materials included in the Basic Kit. Because she is more efficient at cutting and dying reeds than her average customer, Carla Vista is able to produce two Stage 2 kits in one hour from one Basic Kit. (She values her time at $20 per hour.) The Stage 2 kit sells for $33. Prepare an incremental analysis for the Carla Vista's basketweaving studio. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Sales per unit Costs per unit Direct materials Direct labor Total +A $ Sell (Basic Kit) A A Net income per unit +A $ +A Process Further (Stage 2 Kit) +A $ +A $ Net Income Increase (Decrease) $ $ AA $ +A $
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