Ivanhoe 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 of 56% of direct labor cost. The direct materials and direct labor cost per unit to make a pair of finials are $4 and $5, respectively. Normal production is 25,800curtain rods per year. A supplier offers to make a pair of finials at a price of $13.30 per unit. If Ivanhoe Ranch accepts the suppliers offer, all variable manufacturing costs will be eliminated, but the $46,100 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).)

		Make		Buy		Net Income Increase (Decrease)
Direct materials		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
Direct labor		enter a dollar amount		enter a dollar amount		enter a dollar amount
Variable overhead costs		enter a dollar amount		enter a dollar amount		enter a dollar amount
Fixed manufacturing costs		enter a dollar amount		enter a dollar amount		enter a dollar amount
Purchase price		enter a dollar amount		enter a dollar amount		enter a dollar amount
Total annual cost		$enter a total amount		$enter a total amount		$enter a total amount

(b) Should Ivanhoe Ranch buy the finials?

select an option NoYes, Ivanhoe Ranch should select an option not buybuy the finials.

(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 $44,500?

select an option NoYes, income would select an option decreaseincrease by $enter a dollar amount