Question
Keep Your Memories manufactures pre-made scrapbook pages for scrapbookers who dont have time to create their own pages. The clients need only insert their pictures
Keep Your Memories manufactures pre-made scrapbook pages for scrapbookers who dont have time to create their own pages. The clients need only insert their pictures on the pages. It currently sells a childs scrapbook with pre-made pages for $60. Production costs are $24 variable and $13 fixed. The company is considering creating scrapbook kits instead to save labour costs. They are expecting to sell these kits for $52 each and save $11 in variable costs. Prepare an incremental analysis. (If an amount reduces the net income then enter with a negative sign preceding the number e.g. -45,000 or parenthesis, e.g. (45,000).)
Pre-made pages | Kits | Incremental revenue and costs | |||||
Direct materials per unitRevenue per unitFixed costs per unitNet income / (loss) per unitVariable costs per unitPurchase price per unit | $ | $ | $ | ||||
Direct materials per unitPurchase price per unitFixed costs per unitRevenue per unitNet income / (loss) per unitVariable costs per unit | |||||||
Net income / (loss) per unitDirect materials per unitRevenue per unitFixed costs per unitVariable costs per unitPurchase price per unit | |||||||
Fixed costs per unitRevenue per unitDirect materials per unitNet income / (loss) per unitPurchase price per unitVariable costs per unit | $ | $ | $ |
Should the company begin to sell kits or continue to sell pre-made scrapbooks?
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