Pine Street Inc. makes unfinished bookcases that it sells for $59.11. Production
ID: 2473080 • Letter: P
Question
Pine Street Inc. makes unfinished bookcases that it sells for $59.11. Production costs are $37.96 variable and $9.61 fixed. Because it has unused capacity, Pine Street is considering finishing the bookcases and selling them for $72.75. Variable finishing costs are expected to be $5.61 per unit with no increase in fixed costs. Prepare an analysis on a per unit basis showing whether Pine Street should sell unfinished or finished bookcases. (Round answers to 2 decimal places, e.g. 15.25. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Sell Unfinished Process Further Net Income Increase (Decrease) Sales price per unit $ $ $ Cost per unit Variable Fixed Total Net income per unit $ $ $ The bookcases
Explanation / Answer
The book case should be processed further.
Sell process further net income increase(decrease) Sales per unit 59.11 72.75 13.64 Cost per unit: Variable 37.96 43.57 (5.61) Fixed 9.61 9.61 0 Total cost 47.57 53.18 (5.61) Net income per unit 11.54 19.57 8.03