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Should bart simpson funtime manufacturing sell skateboards

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Reference no: EM132969629

Bart Simpson FunTime Manufacturers manufacture and sell unfinished skateboards to customers all over the U.S. The company is considering a plan to process several skateboards further and offer a particularly high end skateboard in a finished form.

The unit costs to manufacture a single skateboard in unfinished form includes:

  • $60 in direct materials, $90 in direct labor, $9 in variable manufacturing overhead, and $10 in fixed manufacturing overhead. An unfinished skateboard sells for $200.
  • Manufacturing a skateboard in finished form will add unit costs of $20 in directmaterials, $50 in direct labor, and $5 in variable manufacturing overhead.
  • The firm has excess capacity sufficient to finish skateboards as well as to sell them unfinished.

Problem 1: Market research shows that the skateboard in finished form can be sold for $300.Based on relevant cost analysis, should Bart Simpson FunTime Manufacturing sell the skateboards in unfinished form or process them further prior to selling? Why?

Reference no: EM132969629

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