IOR PRINTER VERSION | BACK NEXT Brief Exercise 20-5 Your answer is partially cor
ID: 2553599 • Letter: I
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IOR PRINTER VERSION | BACK NEXT Brief Exercise 20-5 Your answer is partially correct. Try again. e Street Inc. makes unfinished bookcases that it sells for $58.51. Production costs are $37.56 v considering finishing the bookcases and selling them for $70.45. Variabl on a per unit basis showing whether Pine Street should sell unfinished or finished bookcases. (Round answers to 2 decimal p using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) ariable and $9.67 fixed. Because it has unused capacity, Pine Street is e finishing costs are expected to be $8.41 per unit with no increase in fixed costs. Prepare an analysis aces, e.g. 15.25. Sell Unfinished Process Further Net Income Increase (Decrease) Sales price per unit 58.51 70.45 11.28 Cost per unit 37.56 18.0B 8.41 Fixed 9.67 9.6 Total 47.23 27.75 8.41 Net income per unit 11.28 42.70 2.87 The bookcases should be processed 6:49 PMExplanation / Answer
Pine Street Inc
Analysis on a per unit basis to determine whether the company should sell unfinished or finished bookcases:
Sell Unfinished
Process Further
Net Income Increase (Decrease)
Sales price per unit
$58.51
$70.45
$11.94
Cost per unit:
Variable cost
$37.56
$45.97
($8.41)
Fixed
$9.67
$9.67
Total
$47.23
$55.64
($8.41)
Net Income per unit
$11.28
$14.81
$3.53
The analysis reveals that the company’s net income would increase by $3.53 per unit on further processing of the bookcases. Hence, the bookcases should be processed further.
Since the company has unused capacity processing further would increase the net income.
The fixed cost per unit does not change as the number of units for processing further would be the same as the number of units of unfinished bookcases.
Sell Unfinished
Process Further
Net Income Increase (Decrease)
Sales price per unit
$58.51
$70.45
$11.94
Cost per unit:
Variable cost
$37.56
$45.97
($8.41)
Fixed
$9.67
$9.67
Total
$47.23
$55.64
($8.41)
Net Income per unit
$11.28
$14.81
$3.53
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