00 pay the unit cost for ition, the Army has vide a profit. Presently, The U.S. Army has approached Real TTU . 1-Go undergarments for soldiers in extremely warm climates. The Army would pay the direct materials, direct labor, and variable manufacturing overhead costs. In addition the agreed to pay an additional $1 per undergarment to cover all other costs and provide a profit Klean Fiber is operating at 70% capacity and does not have any other potential buyers for y Klean Fiber accepts the Army's offer, it will not incur any variable selling expenses related order. Instructions Using incremental analysis, determine whether Klean Fiber should accept the Army's offer. E7.5 (LO 3), AN 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 70% 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 30,000 curtain rods per year. A supplier offers to make a pair of finials at a price of $12.95 per unit. If Pottery Ranch accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $45,000 of fixed manufac turing overhead currently being charged to the finials will have to be absorbed by other products. Instructions a. Prepare the incremental analysis for the decision to make or buy the finials. b. Should Pottery Ranch buy the finials? e. Would your answer be different in (b) if the productive capacity released by not making the way could be used to produce income of $20,000