SRG is still deciding whether it should introduce Y28. The following table provides information on selling prices, variable costs, and inventory carrying costs for Z39 and Y28. SRG will incur additional variable costs and inventory carrying costs for Y28 only if it introduces Y28. Fixed costs equal to 40% of variable costs are allocated to all products produced and sold during the year.

REQUIRED
1. Should SRG manufacture and sell Y28? Show your calculations.
2. Should SRG manufacture and sell Y28 if the data are changed as follows: Selling price per order is $6,400, instead of $8,400, if average manufacturing lead time per order is less than 320 hours; and $6,000, instead of $8,000, if average manufacturing lead time per order is more than 320 hours. All other data for Y28 are the same.

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Selling Price per Order If Average Manufacturing Lead Time per Order Is Annual Average Number of Orders Inventory Carrying Cost per Order per Hour Variable Less thain More than 320 Hours Cost per Order Product Z39 Y28 320 Hours $27,000 8,400 S15,000 5,000 50 25 S26,500 S0.75 0.25 8,000