Carla Vista Company purchases sails and produces sailboats. It currently produces $1,260$ sailboats per year, operating at normal

capacity, which is about $80\%$ of full capacity. Carla Vista purchases sails at $$254$ each, but the company is considering using the excess

capacity to manufacture the sails instead. The manufacturing cost per sail would be $$95$ for direct materials, $$80$ for direct labor, and

$$90$ for total manufacturing overhead. The $$90$ total manufacturing overhead includes $$78,120$ of annual fixed overhead that is

allocated using normal capacity.

The president of Carla Vista has come to you for advice. $"$It would cost me $$265$ to make the sails," she says, "but only $$254$ to buy

them. Should I continue buying them, or have I missed something?"

$($a$)$

Prepare a per unit analysis of the differential costs. $($Enter negative amounts using either a negative sign preceding the number e$.$g$.-45$

or parentheses e$.$g$.(45).)$

Should Carla Vista make or buy the sails?

Carla Vista should

the sails.