Exercise 20-7 Gibbs Company purchases sails and produces sailboats. It currently produces 1,256 sailboats per year operating at normal capacity, which is about 80% of full capacity. Gibbs purchases sails at $249.00 each, but the company is considering using the excess capacity to manufacture the sails instead, The manufacturing cost per sail would be $94.60 for direct materials, $87,00 for direct labor, and s100 for overhead. The $100 overhead is based on $78,150 of annual fixed overhead that is allocated using normal capacity. The president of Gibbs has come to you for advice, It would cost me $281.60 to make the sails," she says, "but only $249.00 to buy them. Should I continue buying them, or have I missed something? Your answer is partially correct. Try again. Prepare a per unit analysis of the differential costs. (Round answers to 2 decimal places, e.g. 15.25. Enter negative amounts using elther a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Make Sails Buy Sails Direct material 118818 118818 Direct labor 10927 10927 Variable overhead 125600 125600 Purchase price 31274 312744 Total unit cost 353,690 312,7 -40946 Should Gibbs make or buy the sails? buy Gibbs should the sails