Windsor Inc. makes unfinished bookcases that it sells for $60. Production costs are $38 variable and $9 fixed. Because it has unused capacity, Windsor is considering finishing the bookcases and selling them for $70. Variable finishing costs are expected to be $7 per unit with no increase in fixed costs. Prepare an analysis on a per-unit basis that shows whether Windsor should sell unfinished or finished bookcases. (If an amount reduce the net income then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).)
Windsor Inc. makes unfinished bookcases that it sells for $60. Production costs are $38 variable and $9 fixed. Because it has unused capacity, Windsor is considering finishing the bookcases and selling them for $70. Variable finishing costs are expected to be $7 per unit with no increase in fixed costs. Prepare an analysis on a per-unit basis that shows whether Windsor should sell unfinished or finished bookcases. (If an amount reduce the net income then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Windsor Inc. makes unfinished bookcases that it sells for $60. Production costs are $38 variable and $9 fixed. Because it has unused
capacity, Windsor is considering finishing the bookcases and selling them for $70. Variable finishing costs are expected to be $7 per
unit with no increase in fixed costs.
Prepare an analysis on a per-unit basis that shows whether Windsor should sell unfinished or finished bookcases. (If an amount reduces
the net income then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).)
Sales per unit
Variable cost per unit
Fixed cost per unit
Total per unit cost
Net income per unit
The bookcases
$
CA
$
LA
Sell
processed further.
$
+A
$
LA
Process Further
$
tA
tA
$
Net Income
Increase
(Decrease)
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