Cullumber 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, Cullumber 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 Cullumber $16 and sells for $30. 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. Cullumber 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. Cullumber is able to produce two Stage 2 kits in one hour from one Basic Kit. (She values her time at $24 per hour.) The Stage 2 kit sells for $39. (a1) Your answer is partially correct. Prepare an incremental analysis for the Cullumber's basketweaving studio. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Blossom Company produces golf discs which it normally sells to retailers for $6 each. The cost of manufacturing 25,000 golf discs is: Blossom also incurs 5% sales commission ($0.30) on each disc sold. Rudd Corporation offers Blossom $4.40 per disc for 3,000 discs. Rudd would sell the discs under its own brand name in foreign markets not served by Blossom. If Blossom accepts the offer, its fixed overhead will increase from $40,800 to $43,800 due to the purchase of a new imprinting machine. No sales commission will result from the special order. (a) Your answer is partially correct. Prepare an incremental analysis for the special order. (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.) Sandhill Timber Corporation uses a machine that removes the bark from cut timber. The machine is unreliable and results in a significant amount of downtime and excessive labor costs. Management is considering replacing the machine with a more efficient one which will minimize downtime and excessive labor costs. Data are presented below for the two machines: It is estimated that the new machine will produce annual cost savings of $102,000. The old machine can be sold to a scrap dealer for $10,400. Both machines will have a salvage value of zero if operated for the remainder of their useful lives. Determine whether the company should purchase the new machine. (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.)
