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Fritz Furniture sells unfinished wood bookshelves. Recently, the firm contemplated switching to production of painted bookshelves, but it determined its net income per unit for
Fritz Furniture sells unfinished wood bookshelves. Recently, the firm contemplated switching to production of painted bookshelves, but it determined its net income per unit for the painted shelves would be $12 lower than that for the unpainted shelves. Shortly after reaching this conclusion, Fritz discovered that it overestimated its fixed production costs for the unfinished shelves by $15 and underestimated its variable production costs for the finished shelves by $10. If Fritz performs incremental analysis using the correct cost estimates, it will find that the net income per unit for the painted shelves is now $3 greater than for the unpainted shelves. the net income per unit for the painted shelves is now $17 less than that for the unpainted shelves. the net income per unit for the painted shelves is now $22 less than that for the unpainted shelves. the net income per unit for the painted shelves is now $13 greater than for the unpainted shelves
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