Question
Keep Your Memories manufactures pre-made scrapbook pages for scrapbookers who don't 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 don't have time to create their own pages. The clients need only insert their pictures on the pages. It currently sells a child's scrapbook with pre-made pages for $53. Production costs are $25 variable and $11 fixed. The company is considering creating scrapbook kits instead to save labour costs. They are expecting to sell these kits for $42 each and save $12 in variable costs. 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 | |||||
Net income / (loss) per unitFixed costs per unitDirect materials per unitVariable costs per unitPurchase price per unitRevenue per unit | $ | $ | $ | ||||
Net income / (loss) per unitFixed costs per unitPurchase price per unitRevenue per unitVariable costs per unitDirect materials per unit | |||||||
Net income / (loss) per unitPurchase price per unitDirect materials per unitVariable costs per unitFixed costs per unitRevenue per unit | |||||||
Net income / (loss) per unitDirect materials per unitFixed costs per unitRevenue per unitVariable costs per unitPurchase price per unit | $ | $ | $ |
Should the company begin to sell kits or continue to sell pre-made scrapbooks? Sell kitsSell pre-made scrapbooks
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