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Question - Deason Distributors has decided to discontinue manufacturing its Venus model blender. Currently, the company has 4,600 partially completed blenders on hand. The government has taken the blades off the market that the company uses in the blender, so each base must be reworked to accommodate a new style of blades. The company has spent $110 per unit to manufacture these blenders to their current state. Reworking each blender will cost $20 for material and $20 for direct labor. In addition, $7 of variable overhead and $32 of allocated fixed overhead (relating primarily to depreciation of plant and equipment) will be allocated per unit. If Deason completes the blenders, it can sell them for $160 per unit. On the other hand, another manufacturer is interested in purchasing the partially completed blenders for $114 each and converting them into choppers. What is the Incremental effect per unit if Deason should complete the blenders?
Incremental profit of $9 per blender
Incremental profit of $1 per blender
Incremental loss of $9 per blender
Incremental loss of $1 per blender
Incremental loss of $33 per blender
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