Brief Exercise 20-5 Pine Street Inc. makes unfinished bookcases that it sells fo

Question

Brief Exercise 20-5 Pine Street Inc. makes unfinished bookcases that it sells for $59.15. Production costs are $37.97 variable and $9.53 fixed. Because it has unused capacity, Pine Street is considering finishing the bookcases and selling them for $70.65. Variable finishing costs are expected to be $6.32 per unit with no increase in fixed costs. Prepare an analysis on a per unit basis showing whether Pine Street should sell unfinished or finished bookcases. (Round answers to 2 decimal places, e.g. 15.25. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Sell Unfinished Process Further Net Income Increase (Decrease) Sales price per unit $ Cost per unit Variable Fixed Total Net income per unit $ The bookcases Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

The bookcases should be process further.

Sell
Unpainted Process
Further Net Income
Increase (Decrease) Sales per unit $59.15 $70.65 $11.50 Cost per unit Variable $37.97 $44.29 $6.32 Fixed 9.53 9.53 0 Total $47.50 $53.82 $6.32 Net Income per unit $11.65 $16.83 $5.18

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