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1B. Should Carl Vista sell or process further?

2B. If the co. had discontinued the division for 2022, determine what net income would have been...

Carla Vista Bikes could sell its bicycles to retailers either assembled or unassembled. The cost of an unassembled bike is as follows. The unassembled bikes are sold to retailers at $511 each. Carla Vista has unused productive capacity that is expected to continue indefinitely: management has concluded that some of this capacity could be used to assemble the bikes and sell them at $551 each. Assembling the bikes will increase direct materials by $5 per bike and direct labor by $10 per bike. Additional variable overhead will be incurred at the normal rates, but there will be no additional fixed overhead as a result of assembling the bikes. Prepare an incremental analysis for the sell-or-process-further decision. (Enter negative amodits using either a negative sign preceding the number eg. 45 or parentheses eg. (45). Do not leave any field blank. Enter O for the amounts.) Crane Forest Corporation operates two divisions, the Timber Division and the Consumer Division. The Timber Division manufactures and sells logs to paper manufacturers. The Consumer Division operates retail lumber mills which sell a variety of products in the do-ityourself homeowner market. The company is considering disposing of the Consumer Division since it has been consistently unprofitable for a number of years. The income statements for the two divisions for the year ended December 31,2022 are presented below: In the Consumer Division, 70% of the cost of goods sold are variable costs and 35% of selling and administrative expenses are variable costs. The management of the company feels it can save $36.900 of fixed cost of goods sold and $41,000 of fixed selling expenses if it discontinues operation of the Consumer Division

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