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Wildhorse Bikes could sell its bicycles to retailers either assembled or unassembled. The cost of an unassembled bike is as follows. Direct materials $183 Direct
Wildhorse Bikes could sell its bicycles to retailers either assembled or unassembled. The cost of an unassembled bike is as follows. Direct materials $183 Direct labor 80 Variable overhead (70% of direct labor) 56 Fixed overhead (30% of direct labor) 24 Manufacturing cost per unit $343 The unassembled bikes are sold to retailers at $521 each. Wildhorse has unused productive capacity that is expected to continue indefinitely; management has concluded that some of this capacity could be used to assemble the bikes and sell them at $563 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 Ofor the amounts.) Process Further Net Income Increase (Decrease) Sell Costs per unit 521 $ 563 42 Costs per unit Materials Labor Variable overhead Fixed overhead Total Net income per unit $ $ $ Prepare an incremental analysis for the sell-or-process-further decision. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45). Do not leave any field blank. Enter Ofor the amounts.) Process Further Net Income Increase (Decrease) Sell Total Labor Fixed overhead Net income per unit Costs per unit Materials Sales per unit Variable overhead 521 $ 563 42 Materials Labor Variable overhead > Fixed overhead Total Net income per unit $ $ $ Should Wildhorse sell or process further? Wildhorse Bikes should Automata
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