Exercise 20-7 Riggs Company purchases sails and produces sailboats. It currently produces 1,270 sailboats per year, operating at normal capacity, which is about 80% of full capacity. Riggs purchases sails at $272 each, but the company is considering using the excess capacity to manufacture the sails instead. The manufacturing cost per sail would be $97.49 for direct materials, $87.79 for direct labor, and $90 for overhead. The $90 overhead includes $78,100 of annual fixed overhead that is allocated using normal capacity. The president of Riggs has come to you for advice. "It would cost me $275.28 to make the sails, she says, "but only $272 to buy them. Should I continue buying them, or have I missed something?" Prepare a per unit analysis of the differential costs. (Round answers to 2 decimal places, e.g. 15.75. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase (Decrease) Make Sails Buy Sails Direct material Direct labor Variable overhead Purchase price Total unit cost Should Riggs make or buy the sails? Riggs should the sails. LINK TO TEXT VIDEO: SIMILAR EXERCISE VIDEO: APPLTED SKILLS If Riggs suddenly finds an opportunity to rent out the unused capacity of its factory for $77,000 per year, would your answer to part (a) change? This is because the net income will by $ Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT VIDEO: SIMILAR EXERCISE VIDEO: APPLTED SKILLS Question Attempts: 0 of 2 used