Way Living Sells Unfinished Oak Shelves for $35 Each

Multiple Choice

Way Living sells unfinished oak shelves for $35 each.Budgeted sales for the year are expected to be 4,000 shelves.Each shelf requires 4 linear feet of wood to produce.The cost of wood is $4.80 per linear foot.Direct labor is $6.00 per shelf.Variable overhead and fixed overhead costs per unfinished shelf are $1.00 and $0.50 respectively.Way Living is considering whether it should stain the shelves so it can sell them for $48.00 each.It estimates it will sell 60% of the budgeted shelves 'stained' with the others unfinished.The direct costs of staining each shelf are $9.00.How much is the incremental effect on profit if the company stains the shelves?

A) $16,000
B) $67,200
C) $52,000
D) None of these answer choices are correct.