Exercise 20-9 Anna Garden recently opened her own basketweaving studio. She sell

Question

Exercise 20-9

Anna Garden recently opened her own basketweaving studio. She sells finished baskets in addition to the raw materials needed by customers to weave baskets of their own. Anna has put together a variety of raw material kits, each including materials at various stages of completion. Unfortunately, owing to space limitations, Anna is unable to carry all varieties of kits originally assembled and must choose between two basic packages.

The basic introductory kit includes undyed, uncut reeds (with dye included) for weaving one basket. This basic package costs Anna $18 and sells for $35. The second kit, called Stage 2, includes cut reeds that have already been dyed. With this kit the customer need only soak the reeds and weave the basket. Anna is able to produce the second kit by using the basic materials included in the first kit and adding one hour of her own time, which she values at $22 per hour. Because she is more efficient at cutting and dying reeds than her average customer, Anna is able to make two kits of the dyed reeds, in one hour, from one kit of undyed reeds. The Stage 2 kit sells for $40.

Exercise 20-9 Anna Garden recently apened her own basketweaving stucio. She ses finished backkets in addition to the raw materials needed by customers to weave baskets of their own. Anna has put together a variety of raw material kits, each including materials at various stages af completion. Unfortunately, awing to space mitations, Anna is unable to carry all varietles of kits originally assembled and must choose between two basic packages. The basic introductory kit includes undyed, uncut reeds (with dye included) for weaving one basket. This basic package costs Anna $18 and sells for $35. The second kit, called Stage 2, Includes cut reeds that have already been dyed. With this kit the customer need only soak the reeds and weave the basket. Anna ls able to produce the second kit by using the basic materials lincluded in the first kit and adding one hour of her own time, which she values at $22 per hour. Becouse she is mare efricient at cutting and dying reads than her average customer, Anna is able to make two kits of the dyed reeds, in one hour, from one kit of undyed reeds The Stage 2 kit sels for $40. Your answer is partially correct. Try again Prepare an incremental analysis for the Annas basket ering studio. (Enter negative amounts using either a negative sign preceding the number ag.-4S or parentheses e.g. 4S1 Process Further (Basic Kit) Stage 2 Kit) (Decrease) Costs per unt Direct materials Net income per unt LINK TO TEXT Your answer is correct Should Anna's carry the basic introductory kit with undyed and uncut reeds or the Stage 2 kit with reeds aiready dyed and cut? Anna should carry the Click if you would like to Show Work for this question:en Show Wer Stage 2 Kit

Explanation / Answer

Sell (Basic Kit) Process Further (Stage 2 Kit) Net Income Increase (Decrease) Sales per unit 35 40 5 Cost per Unit Direct Materials 18 9 9 Direct Labor 0 11 -11 Total 18 20 -2 Net Income per unit 17 20 3

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