Question: Sell ONLY Basic Kit a) Sales price per unit Sell ONLY Deluxe Kit Net Income Increase or (Decrease) Costs per unit: Direct Materials Direct Labor

 Sell ONLY "Basic Kit" a) Sales price per unit Sell ONLY"Deluxe Kit" Net Income Increase or (Decrease) Costs per unit: Direct Materials

Sell ONLY "Basic Kit" a) Sales price per unit Sell ONLY "Deluxe Kit" Net Income Increase or (Decrease) Costs per unit: Direct Materials Direct Labor Total Net Income per unit b) Anna just opened her own basket-weaving studio. She sells finished baskets as well as the "D-I-Y Kits" of materials needed by customers to weave baskets of their own. Space is very limited so Anna can sell ONLY one of these two kits. Should she sell ONLY the "Basic Kit" or ONLY the "Deluxe Kit"? "Basic Kit" includes undyed, uncut reeds (with dye included) for weaving one basket. Anna's cost is $16. Anna retails (sells to customers) the Basic Kit for $30. A "Deluxe Kit would include already dyed and cut reeds so the customer need only weave the basket. Anna can produce "Deluxe Kits" by using the materials included in the "Basic Kit. She can make TWO Deluxe Kits" in one hour from one Basic Kit. (She values her time at $18 per hour.) The "Deluxe Kit" will retail for $36. Instructions: (a) Prepare an incremental analysis to determine whether Anna should sell ONLY the Basic Kit or ONLY the "Deluxe Kit. (b) Which kit should she sell? Why or why not

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