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Question 7 of 9 - /6 E View Policies Current Attempt in Progress Pottery Ranch Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 50% of direct labor cost. The direct materials and direct labor cost per unit to make a pair of finials are $4 and $5, respectively. Normal production is 25,000 curtain rods per year. A supplier offers to make a pair of finials at a price of $12.75 per unit. If Pottery Ranch accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $40,000 of fixed manufacturing overhead currently being charged to the finals will have to be absorbed by other products, (a) a Prepare the incremental analysis for the decision to make or buy the finals. (Enter negative amounts using either a negative sign preceding the number eg. 45 or parentheses es. (451) Net Income Increase (Decrease Make Buy Direct materials Direct labor -76 Prepare the incremental analysis for the decision to make or buy the finiats. (Enter negative amounts using either a negative sin preceding the number eg. 45 or parentheses es (451) Make Buy Net Income Increase (Decrease) Direct materials $ Direct labor Variable overhead costs Fixed manufacturing costs Purchase price Total annual cost MacBook -16 (b) Should Pottery Ranch buy the finals? Pottery Ranch should the finials (c) Would your answer be different in (b) if the productive capacity released by not making the finals could be used to produce income of $35,750? income would v bys e Textbook and Media Save for Later Attempts:0 of 5 used Submit