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.

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Annual Average Number of Orders Selling Price per Order If Average Manufacturing Lead Time per Order Is Variable Cost per Order Inventory Carrying Cost per Order per Hour Less Than More Than 320 Hours Product Z39 Y28 320 Hours $27,000 $26,500 $15,000 5,000 $0.75 50 25 8,400 8,000