Speedy Bikes could sell its bicycles to retailers either assembled or unassembled. The cost of an unassembled bike is as follows.

Direct materials		$150
Direct labor		70
Variable overhead (70% of direct labor)		49
Fixed overhead (30% of direct labor)		21
Manufacturing cost per unit		$290

The unassembled bikes are sold to retailers at $450 each. Speedy currently has unused productive capacity that is expected to continue indefinitely; management has concluded that some of this capacity can be used to assemble the bikes and sell them at $495 each. Assembling the bikes will increase direct materials by $5 per bike, and direct labor by $10 per bike. Additional variable overhead will be incurred at the normal rates, but there will be no additional fixed overhead as a result of assembling the bikes.

Prepare an incremental analysis for the sell-or-process-further decision. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter 0 for the amounts.)

		Sell		Process Further		Net Income Increase (Decrease)
		$		$		$
		$		$		$

Should Speedy sell or process further?

Speedy Bikes should ? further.