make two kits of the dyed reeds, in one hour, from one kit of undyed reeds. The kit of dyed and cut reeds sells for $33.Complete the incremental analysis below to determine whether Stacy's basketweaving shop should carry the basicintroductory kit with undyed and uncut reeds, or the Stage 2 kit with reeds already dyed and cut.
(Round all answersto 2 decimal places, e.g. 5.25. If an amount is blank enter 0, all boxes must be filled to be correct. If the impact onnet income is a decrease use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45). Enter all other amounts amounts as positive and subtract where necessary.)
tage 2 Kit)
Sales per unit$ 27 $ 33 $ 6Costs per unitDirect materials $ 12 $ 6 $ 6Direct labor 0 9 -9Total$ 12 $ 15 $ -3 Net income per unit$ 15 $ 18 $ 3Should Stacy carry the Stage 2 kits?Yes(1) The cost of materials decreases because Stacy can make two Stage 2 Kits from the materials for a basic kit.(2) The total time to make the two kits is one hour at $18 per hour or 9.00 per unit.Stacy
carry the Stage 2 Kits. The incremental revenue, $6.00, exceeds the incremental processing costs,$3.00. Thus, net income will increase by processing the kits further.Crone Enterprises uses a word processing computer to handle its sales invoices. Lately, business has been so goodthat it takes an extra 3 hours per night, plus every third Saturday, to keep up with the volume of sales invoices.Management is considering updating its computer with a faster model that would eliminate all of the overtime processing.
Original purchase cost $15,000 $21,000Accumulated depreciation 6,000 -Estimated operating costs 24,000 20,000Useful life 5 years 5 yearsIf sold now, the current machine would have a salvage value of $5,000. If operated for the remainder of its usefullife, the current machine would have zero salvage value. The new machine is expected to have zero salvage valueafter 5 years.Complete the analysis to determine if the current machine should be replaced.
(Ignore the time value of money. If an amount is blank enter 0, all boxes must be filled to be correct. If the impact on net income is a decrease useeither a negative sign preceding the amount, e.g. -45 or parenthesis, e.g. (45). Enter all other amounts as positiveamounts and subtract where necessary.)