4. Pick 'n Strum Company produces and sells hand-constructed banjos. There are four (4) activities in the production process: (1) purchasing the DM (wood, strings, etc.), (2) cutting and sanding the wood into the body, neck, and pegs; (3) assembling the pieces together; and (4) packaging. The current selling price is $180 per banjo and we can sell as many as we make. For each banjo, we incur the following costs at each stage: Activity 1: DM = $80 Activity 2: DL= $20 Activity 3: DL= $30 Activity 4: DM = $2; DL = $5 Now, we are considering selling kits of unassembled banjo parts and letting the customers assemble the banjos themselves. We would still go through activities (1) and (2). Then, our packaging activity would take DM = $1 and DL = $8 per banjo. We can sell as many kits as we want for $140 each. Should we sell the banjo parts in kits or produce and sell completed banjos? Support your answer. outer

4. Pick 'n Strum Company produces and sells hand-constructed banjos. There are four (4) activities in the production process: (1) purchasing the DM (wood, strings, etc.), (2) cutting and sanding the wood into the body, neck, and pegs; (3) assembling the pieces together; and (4) packaging. The current selling price is $180 per banjo and we can sell as many as we make. For each banjo, we incur the following costs at each stage: Activity 1: DM = $80 Activity 2: DL= $20 Activity 3: DL= $30 Activity 4: DM = $2; DL = $5 Now, we are considering selling kits of unassembled banjo parts and letting the customers assemble the banjos themselves. We would still go through activities (1) and (2). Then, our packaging activity would take DM = $1 and DL = $8 per banjo. We can sell as many kits as we want for $140 each. Should we sell the banjo parts in kits or produce and sell completed banjos? Support your answer. outer

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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