Pine Street Inc. makes unfinished bookcases that it sells for $58.51. Production costs are $37.56 variable and $9.67 fixed. Because it has unused capacity, Pine Street is considering finishing the bookcases and selling them for $70.45. Variable finishing costs are expected to be $8.41 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).)

The book case should be processed further

Explanation:

                                   Sell Option  Process Further   Increase/Decrease

Sales per unit                   $58.51           $70.45                      $11.94

Cost per unit:

Variable                             $37.56          $45.97                      ($8.41)

Fixed                                  $9.67            $9.67                        $0

Total cost                          $47.23          $55.64                      ($8.41)

Net income per unit        $11.28          $14.81                        $3.53

Conclusion: The book case should be processed further as its Net Income per unit is higher than if the Pine street should sell.

answer; situational irony;

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