Waiting times, relevant revenues, and relevant costs (continuation of 19-31). 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.

1. Should SRG manufacture and sell Y28? Show your calculations.

2. Should SRG manufacture and sell Y28 if the data in Problem 19-31 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 thesame.

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Selling Price per Order Annual Average Number of Orders If Average Manufacturing Lead Time per Order Is More Than Inventory Carrying Cost per Order per Hour Product Less Than 320 Hours Variable Cost per Order $15,000 320 Hours Z39 $27,000s $26,500 $0.75 50 Y28 25 0.25 8,400 8,000 5,000