*Exercise 7-7 a-b (Video) Riggs Company purchases sails and produces sailboats. It currently produces 1,250 sailboats per year, operating at normal capacity, which is about 80% of full capacity. Riggs purchases sails at $256 each, but the company is considering using the excess capacity to manufacture the sails instead. The manufacturing cost per sail would be $91 for direct materials, $90 for direct labor, and $90 for overhead. The $90 overhead is based on $78,750 of annual fixed overhead that is allocated using normal capacity. The president of Riggs has come to you for advice. "It would cost me $271 to make the sails," she says, "but only $256 to buy them. Should I continue buying them, or have I missed something?" 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).) 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. If Riggs suddenly finds an opportunity to rent out the unused capacity of its factory for $78,000 per year, would your answer to part (a) change