Instructions: Calculate the incremental benefit or cost of making decorated vases
Product	Plain Vases
Cost Information	Units	$
Sales	30,000.00	1,800,000.00
Costs @ 80% capacity
Direct materials	4.00	120,000.00
Direct labor	15.00	450,000.00
Variable OH ($.50 per DL$)	7.50	225,000.00
Fixed OH ($.70 per DL$) - allocated	10.50	315,000.00
Total cost	37.00	1,110,000.00
Variable selling expense (commissions of 4% of sales dollars)	2.40	72,000
Fixed selling expense (allocated based on units sold)	0.50	15,000
If we add additional decoration to our vases, they can be sold for $100 each. We estimate market demand for decorated vases is 10,000 units
Incremental cost
Direct materials	8.00
Direct labor	13.00
Variable OH	8.45
Fixed OH	to process further would require one new machine.
Details of new machine	Cost is $100,000 with a useful life of 10 years and $0 salvage value
Incremental Benefit of processing further
Incremental Revenue
Incremental Cost:
DM
DL
Var OH
Fixed OH
Var Selling
Incremental Costs
Incremental Benefit of processing further