Blossom Street Inc. makes unfinished bookcases that it sells for $57. Production costs are $37 variable and $10 fixed. Because it has unused capacity, Blossom Street is considering finishing the bookcases and selling them for $70. Variable finishing costs are expected to be $6 per unit with no increase in fixed costs. Prepare an analysis on a per unit basis showing whether Blossom Street should sell unfinished or finished bookcases. (Enter negative amounts using either a negative sign preceding the number e. g. -45 or parentheses e. g. (45).)

Answer and Explanation:

The Preparation of an analysis on a per unit basis is shown below:-

Particulars          Sell unfinished   Sell finished   Increase/Decrease

                               bookcases      bookcases          in income

Sale price per

unit                         $57                      $70               $13

Less: variable cost

per unit                  $37                    $43                  $6

                                                     ($37 + $6)

Les: fixed cost per

unit                        $10                    $10                      $0

Total cost per

unit                       $47                    $53                     $6

Net income per

unit                      $10                      $17                      $7

Therefore, Unfinished bookcases are further processed, as net profit per unit increases further by processing by $7

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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