Al Maha Co. produces 1,200 units of petroleum with direct materials costs of RO 32,000, Direct Labor costs of RO 12,000, Variable Overhead costs of RO 25,000 and Fixed Overhead costs of RO 22,000. Oman Oil Co. offers to produce the units of petroleum at RO 72 per unit.

Instructions

a. Prepare the incremental analysis for the decision to make or buy the petroleum.