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Mesa Verde manufactures unpainted furniture for the do-it-yourself (DIY) market. It currently sells a table for $75. Production costs per unit are $35 variable and
Mesa Verde manufactures unpainted furniture for the do-it-yourself (DIY) market. It currently sells a table for $75. Production costs per unit are $35 variable and $11 fixed. Mesa Verde is considering staining and sealing the table to sell it for $107. Variable costs per unit to finish each table are expected to be an additional $22 per unit, and fixed costs are expected to be an additional $2 per unit. Prepare an analysis showing whether Mesa Verde should sell unpainted or finished tables. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Process Further Net Income Increase (Decrease) Sell Sales price per unit Cost per unit Variable $ $ $ Fixed Total $ $ $ Net income per unit of The tables should be Darcy Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on large homes and commercial properties. Last year, Darcy Roofing spent $73,800 refurbishing the lift. It has just determined that another $41,000 of repair work is required. Alternatively, it has found a newer used lift that is for sale for $173,500. The company estimates that both lifts would have useful lives of 6 years. The new lift is more efficient and thus would reduce operating expenses by about $24,600 per year. Darcy Roofing could also rent out the new lift for about $10,000 per year. The old lift is not suitable for rental. The old lift could currently be sold for $25,500 if the new lift is purchased. Prepare an incremental analysis showing whether the company should repair or replace the equipment. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Retain Equipment Replace Equipment Net Income Increase (Decrease) Operating expenses $ $ Repair costs Rental revenue New machine cost Sale of old machine Total cost $ $ Should company repair or replace the equipment? The equipment be replaced
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