E7 – 9 Determine whether Anna’s basket weaving studio should carry the basic introductory kit

with reeds already dyed and cut. Prepare an incremental analysis to support your answer.
Basic introductory Stage 2 kit Net income
kit (increase, decrease)
Revenue $30 $36 $6
Direct materials 16 8* 8
Direct Labor 0 9* (9)
Net income $14 $19 $5

 $16/2 = $8
 $18/2 = $9
Anna should carry the stage 2 kit with reeds already dyed and cut because it can increase the net
income by $5 per kit if Anna chose to process it further.