Cullumber Bikes could sell its bicycles to retailers either assembled or unassembled. The cost of an unassembled bike is as follows. Direct materials $126 Direct labor 60 Variable overhead (70% of direct labor) 42 Fixed overhead (30% of direct labor) 18 Manufacturing cost per unit $246 The unassembled bikes are sold to retailers at $406 each. Cullumber has unused productive capacity that is expected to continue indefinitely; management has concluded that some of this capacity could be used to assemble the bikes and sell them at $449 each. Assembling the bikes will increase direct materials by $5 per bike and direct labor by $10 per bike. Additional variable overhead will be incurred at the normal rates, but there will be no additional fixed overhead as a result of assembling the bikes. (a) Prepare an incremental analysis for the sell-or-process-further decision. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter O for the amounts.)
Cullumber Bikes could sell its bicycles to retailers either assembled or unassembled. The cost of an unassembled bike is as follows. Direct materials $126 Direct labor 60 Variable overhead (70% of direct labor) 42 Fixed overhead (30% of direct labor) 18 Manufacturing cost per unit $246 The unassembled bikes are sold to retailers at $406 each. Cullumber has unused productive capacity that is expected to continue indefinitely; management has concluded that some of this capacity could be used to assemble the bikes and sell them at $449 each. Assembling the bikes will increase direct materials by $5 per bike and direct labor by $10 per bike. Additional variable overhead will be incurred at the normal rates, but there will be no additional fixed overhead as a result of assembling the bikes. (a) Prepare an incremental analysis for the sell-or-process-further decision. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter O for the amounts.)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 3CE: Patz Company produces two types of machine parts: Part A and Part B, with unit contribution margins...
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![Cullumber Bikes could sell its bicycles to retailers either assembled or unassembled. The cost of an unassembled
bike is as follows.
Direct materials
$126
Direct labor
60
Variable overhead (70% of direct labor)
42
Fixed overhead (30% of direct labor)
18
Manufacturing cost per unit
$246
The unassembled bikes are sold to retailers at $406 each.
Cullumber has unused productive capacity that is expected to continue indefinitely; management has concluded
that some of this capacity could be used to assemble the bikes and sell them at $449 each. Assembling the bikes
will increase direct materials by $5 per bike and direct labor by $10 per bike. Additional variable overhead will be
incurred at the normal rates, but there will be no additional fixed overhead as a result of assembling the bikes.
(a)
Prepare an incremental analysis for the sell-or-process-further decision. (Enter negative amounts using
either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field
blank. Enter 0 for the amounts.)
Net Income
Process
Increase
Sell
Further
(Decrease)
$
$
$
2$
(>](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0d7c7df4-4531-436c-8dac-594063fe2081%2Ffc3e1f34-25b5-48bd-9b77-3c872757af1b%2Folbe2sn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Cullumber Bikes could sell its bicycles to retailers either assembled or unassembled. The cost of an unassembled
bike is as follows.
Direct materials
$126
Direct labor
60
Variable overhead (70% of direct labor)
42
Fixed overhead (30% of direct labor)
18
Manufacturing cost per unit
$246
The unassembled bikes are sold to retailers at $406 each.
Cullumber has unused productive capacity that is expected to continue indefinitely; management has concluded
that some of this capacity could be used to assemble the bikes and sell them at $449 each. Assembling the bikes
will increase direct materials by $5 per bike and direct labor by $10 per bike. Additional variable overhead will be
incurred at the normal rates, but there will be no additional fixed overhead as a result of assembling the bikes.
(a)
Prepare an incremental analysis for the sell-or-process-further decision. (Enter negative amounts using
either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field
blank. Enter 0 for the amounts.)
Net Income
Process
Increase
Sell
Further
(Decrease)
$
$
$
2$
(>
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