Buddy Pets has recently started to manufacture talking toy pets. The cost structure to manufacture 10,500 of these toy pets is as follows: Direct materials ($35 per pet) Direct labour ($26 per pet) $367,500 273,000 Variable overhead ($8 per pet) 84,000 Allocated fixed overhead ($21 per pet) 220,500 Total $945,000 Buddy Pets is approached by Maxum Inc., which offers to make the toy pets for $80 per unit Using incremental analysis, determine whether Buddy Pets should accept this offer under each of the following independent assumptions: Prepare an incremental analysis. Assume that $84,000 of the fixed overhead cost (in making 10,500 of the toy pets) is avoidable. (Enter savings with a negative sign preceding the number eg-15,000 or parenthesis, eg. (15,000)) Cost Direct materials Make Buy 367500 Direct labour 273000 Variable overhead 84000 Foed overhead 220500 Purchase price O 945000 Total annual cost Net Income Increase (Decrease) 367500 273000 84000 Should Buddy Pets continue to make the pets or buy the pets? Buddy Pets should the pets. Prepare an incremental analysis. Assume that none of the fixed overhead is avoidable. However, if the pets are purchased from Maxum, Buddy Pets can use the released productive resources to generate additional income of $167,400. (Enter savings with a negative sign preceding the number eg.-15,000 or parenthesis, eg. (15,000)) Cost Total annual cost :Opportunity cost Total cost Make Should Buddy Pets continue to make the pets or buy the pets? Buddy Pets should the pets Buy Net Income Increase (Decrease)