Question

Question 6 Keep Your Memories manufactures pre-made scrapbook pages for scrapbookers who don't have time to create their own pages. The clients need only insert their pictures on the pages. It currently sells a child's scrapbook with pre-made pages for $53. Production costs are $25 variable and $11 fixed. The company is considering creating scrapbook kits instead to save labour costs. They are expecting to sell these kits for $42 each and save $12 in variable costs. Prepare an incremental analysis. (If an amount reduces the net Income then enter with a negative sign preceding the number e.g. -45,000 or parenthesis, e.g. (45,000).) Pre-made pages Kits Incremental revenue and costs Should the company begin to sell kits or continue to sell pre-made scrapbooks? LINK TO TEXT Question Attempts: 0 of 1 used SAVE FOR LATER SUBMIT ANSWER

Answer 1

Answer-

Incremental Analysis
Particulars	Pre-made pages	Kits	Incremental Revenue and costs
	$	$	$
Selling price	53	42	-11
Less- Variable costs	25	12	13
Contribution margin	28	30	2
The company should begin to sell kits instead of pre-made scrapbooks.