LM 1 Make-Buy decision 2 The company, a wind sailing board manufacturer, is currently operating at 70% capacity and producing about 18,000 units a year 3 To use more capacity, the manager has been considering that company manufacture its own sails 4 Currently company purchases sails from a supplier at a unit price of $62. 5 Estimates show that company can manufacture its own sails for a $29 direct materials cost and a $19 direct labor cost per unit. 6 The variable factory overhead is $5 per sail. 7 The company's accountant would allocate fixed manufacturing overhead (depreciation of manufacturing space) of $14 per sail to the sail production, 9 a. Should company make or buy the sails? 10 b. What would be the cost of the incorrect decision? 11 c. Suppose that company could rent out the part of the factory that would otherwise be used for sail manufacturing for $4,000 a month. How would this affect the decesion in part a