Lennon Company manufactures 30,000 units of wheel sets for use in its annual production. Costs are as follows: direct materials are $30,000; direct labor is $45,000; variable overhead is $35,000; and fixed overhead is $60,000. McCartney Company has offered to sell Lennon 30,000 units of wheel sets for $6 per unit. If Lennon accepts the offer, some of the facilities presently used to manufacture wheel sets could be rented to a third party at an annual rental of $20,000. Additionally, $1.50 per unit of the fixed overhead applied to wheel sets would be totally eliminated. Requirements: Prepare an incremental analysis schedule to demonstrate if Lennon should accept McCartney's offer.

	Produce	Buy