Incremental Analysis Download the Unit VI Assignment Excel worksheet and complete the following problems on the worksheets. Each problem is designated by a worksheet in the tabs at the bottom of th

Incremental Analysis

Download the Unit VI Assignment Excel worksheet and complete the following problems on the worksheets. Each problem is designated by a worksheet in the tabs at the bottom of the file.

Worksheet Problem 1

Gulf Coast Paddle produces paddleboards for retailers in the United States. The cost of producing 2,500 paddleboards includes the following:

Materials: $400,000

Labor: $150,000

Variable Overhead: $100,000

Fixed Overhead: $300,000

TOTAL: $950,000

Selling expense per board: $15

Dream Sailing has offered to purchase 1,000 paddleboards from Gulf Coast Paddle for $380 per board. This order will not conflict with Gulf Coast Paddle’s current orders with a selling price of $400 per board.

1. Prepare an incremental analysis for the special order.
2. Should Gulf Coast Paddle accept or reject the order?

Worksheet Problem 2

Wilson furniture uses a piece of equipment in the production of their furniture. Business has been increasing, and they are considering replacing the equipment with a newer machine. The company currently operates as follows: Revenue of $100,000, maintenance expense of $12,000, and operating expenses of $42,000. The new machine would operate as follows: Revenue of $100,000, maintenance expense of $5,000, and operating expenses of $37,000. The current equipment was upgraded 2 years prior at a cost of $15,000.

1. Prepare an incremental analysis comparing the current and new equipment that is being considered.
2. Should the company keep its current or purchase the new piece of equipment?
3. Were all costs relevant to your decision? If not, why?

Complete the worksheets, then submit the spreadsheet.