Rachel Rey recently opened her own basketweaving studio. She sells finished baskets in addition to the raw materials needed by customers to weave baskets of their own. Rachel has put together a variety of raw material kits, each including materials at various stages of completion. Unfortunately, owing to space limitations, Rachel is unable to carry all varieties of kits originally assembled and must choose between two basic packages. The basic introductory kit includes undyed, uncut reeds (with dye included) for weaving one basket. This basic package costs Rachel $14 and sells for $30. The second kit, called Stage 2, includes cut reeds that have already been dyed. With this kit the customer need only soak the reeds and weave the basket. Rachel is able to produce the second kit by using the basic materials included in the fi rst kit and adding one hour of her own time, which she values at $18 per hour. Because she is more effi cient at cutting and dying reeds than her average customer, Rachel is able to make two kits of the dyed reeds, in one hour, from one kit of undyed reeds. The Stage 2 kit sells for $35. Instructions

Determine whether Rachels basketweaving shop should carry the basic introductory kit with undyed and uncut reeds or the Stage 2 kit with reeds already dyed and cut. Prepare an incremental analysis to support your answer.

Read the questions below and write your answer in he Apace prowded Total Marks Obtained Decislon-Making erass the Organ nizacion ora Company is coesidering the punthase of a new machine. The invoice price of the machine is $140,000, ftreight chargacs are estimoned to be $4,000, and astallation costs are exjected lo be 56,000. Salvage value of the new equipment i expectel to be zero sher a useful life od S years. Esoting equipenern ooukd be retzined and used fot an additional 5 yem if the new machine is not purchssed At that time. the silvape value of the equipment would be zuro If the sew maching is parchased now, the existing machine would have to be scropped. Aunona's zccountoet, Lissh Huang, has accumulateal the following dta reganding annual sales and espenses with and without the new machine 1. Without the new machine, Aurora can sell 12,000I units of product anmually at a per uit selling price of S100. If the new machine is purchased, the rumber of units produced and sold 0wid increase hy ins, and the selling price would reman the smc 2 The new machine is faster than the old machine, and it is moce effi sient in its age of mster als With the old machine the pc s proa t rute will be 25% of sales, whereas the rate will be 311% ofsales with the tew machne. 3, Annual sellig expesses are $1s0,oo with the cumt aqipnent. Becauese the new equipment would produce a greater Bumber of unis to be sold, unmual selling expemses ice expected to increase by 10% ifit is purchased dminestrative espenses are expecsed so be $100,000 with the old machine, and 5113,000 with the new machine current book value of the existing machine is $36,000. Aucora uses straight-line 5. The dep Instructions With the elass divsded into groups, prepare an imcremenmal annlysis for the 5 years showing whether Aurora should keep the existing machine ur buy the new machine (gsore income tax