Bonita Inc. has been manufacturing its own shades for its table lamps. The company is currently operating at $100\%$ of capacity, and

variable manufacturing overhead is charged to production at the rate of $65\%$ of direct labour costs. The direct materials and direct

labour costs per unit to make the lampshades are $$4\mathrm{.}60$ and $$6\mathrm{.}00,$ respectively. Normal production is $48,100$ table lamps per year.

A supplier offers to make the lampshades at a price of $$15\mathrm{.}00$ per unit. If Bonita Inc. accepts the supplier's offer, all variable

manufacturing costs will be eliminated, but the $$41,400$ of fixed manufacturing overhead currently being charged to the lampshades

will have to be absorbed by other products.

$($a$)$

Your answer is correct.

Prepare the incremental analysis for the decision to make or buy the lampshades. $($Round answers to $0$ decimal places, e$.$g$.5,275.$ If

an amount reduces the net income then enter with a negative sign preceding the number eg$.-15,000$ or parenthesis, e$.$g$.(15,000).$ While

alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.$)$

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$($b$)$

Your answer is correct.

Should Bonita Inc. buy the lampshades?

Bonita Inc. should

the lampshades.

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$($c$)$

Would your answer be different in part $($b$)$ if the productive capacity released by not making the lampshades could be used to

produce income of $$39,750?$ DO PART C