Sol Ltd. manufactures unfinished chairs that sell for $46.28 each and cost $20.00 to make....
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Sol Ltd. manufactures unfinished chairs that sell for $46.28 each and cost $20.00 to make. It currently produces 10164 chairs per year. The company has been considering finishing the chairs, which it could then sell the chairs for $61.47 each. However, it has been determined that only 7928 finished chairs could be sold; the other 2236 chairs would continue to be sold unfinished.
Costs per chair associated with processing further are:
Direct materials
$4.27
Direct labour
12.62
Variable overhead
3.57
Fixed overhead
4.65
If the company decides to process further, the incremental profit (loss) would be:
Select one:
a. $-78646
b. $116779
c. $-41781
d. $325127
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