Managerial Accounting

Free Version

Upgrade subject to access all content


Instruments-R-Us: Finish Drums or Not?


Instruments-R-Us Inc. is considering selling some instruments without varnish ("unfinished"). If they sell them unfinished, they save $2.00 per square inch of finishing costs. The sales price with and without varnish and the area requiring varnish, in square inches, is shown below.

Instruments-R-Us Sales Price if Varnished Sales price without Varnish Areas to varnish, in square inches
Violin \$600 \$400 26
Flute \$125 \$80 18
Drum set \$400 \$300 200

What is the difference in profits per drum set between finishing or not finishing?