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Exercise 20-05 Pottery Ranch Inc. has been marfacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity and
Exercise 20-05 Pottery Ranch Inc. has been marfacturing 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 of 51% of direct labor cost. The direct materials and direct labor cost per unit to make a pair of finials are 4 and 65, respectively. Normal production is 31.700 curtain rodo per year. A supplier offers to make a pur of finials at a price of $13.05 per una 17 Pottery Ranch accepts the supplier's offer, i variable manufacturing costs will be eliminated, but the $46,900 of fixed manufacturing overhead currently being charged to the finials will have to be absorbed by other products, Prepare the incremental analysis for the decision to make or buy the finals (Enter negative amounts using either a negative in preceding the number eg -4 or parentheses no. (45). Net Income Make Buy Increase (Decrease) Direct materials Directibor Variable overhead costs Fored manufacturing costs Purchase price Total anual cost (b) Should Pottery Ranch buy the finials? V Pottery Ranch should the finals (c) Would your answer be different in (b) if the productive capacity released by not making the finials could be used to produce income of $53,8502 income would v by by $ Click if you would like to Show Work for this question: Open Show Work
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