Solution-Prepare an incremental analysis for the

Prepare an incremental analysis for the sell-or-process

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Reference no: EM133060494

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

Direct materials $189

Direct labor 80

Variable overhead (70% of direct labor) 56

Fixed overhead (30% of direct labor) 24

Manufacturing cost per unit $349

The unassembled bikes are sold to retailers at $531 each. Crane 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 $575 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.

Required - Prepare an incremental analysis for the sell-or-process-further decision.

Reference no: EM133060494

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Prepare an incremental analysis for the sell-or-process

Reference no: EM133060494

Reference no: EM133060494

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