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B) I believe that Gruden should accept the special offer, if Gruden were to accept the special offer her net income would increase by $3000.
B) I believe that Gruden should accept the special offer, if Gruden were to accept the special offer her net income would increase by $3000. Taos (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 overbead 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 85, 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 acepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $45.000 of fland manufacturing overhead currently being charged to the finials will have to be absorbed by other products the incremental analysis for make-or-huy decision. 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 (h0 if the productive capacity released by not making the finials could be used to produce income of $40,000
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