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Cullumber Ranch Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity, and variable manufacturing
Cullumber Ranch Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate 66% of direct labor cost. The directs and direct labor cost per unit to make a pair of finials are $4 and $5, respectively. Normal production is 28,400 curtain rods per year. A supplier offers to make a pair of finials at a price of $13.35 per unit. If Cullumber Ranch accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $45,900 of fixed manufacturing overhead currently being charged to the finials will have to be absorbed by other products. (a) Prepare the incremental analysis for the decision to make or buy the finials. (Enter negative amounts using either a negative sign preceding the number e.g. 45 or parentheses e.g. (45).)
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