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

Direct materials		$155
Direct labor		70
Variable overhead (60% of direct labor)		42
Fixed overhead (40% of direct labor)		28
Manufacturing cost per unit		$295

The unassembled bikes are sold to retailers at $390each. Top Gear 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 $460each. Assembling the bikes will increase direct materials by $5per bike, and direct labor by $20per 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. (a) Prepare an incremental analysis for the sell-or-process-further decision. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g.-15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)

		Sell		Process Further		Net Income Increase (Decrease)
Sales per unit		$		$		$
Costs per unit
Materials
Labor
Variable overhead
Fixed overhead
Total		$
Net income per unit		$		$		$

(b) Should Top Gear sell or process further?