Name: Ac 202 Final Problem 3 (10 points) Riggs Company purchases sails and year, operating at normal capacity, which is about 80% of full capacity. Riggs pure S250 each, but the company is considering using the excess capacity to produces sailboats. It currently produces 1,200 sailboats per at hases sails manufacture the sails and $90 f allocated to the sailboat production. manufacturing cost per sail would be $100 for direct material, $80 for direct labor, or overhead. The overhead includes $78,000 of annual fixed overhead that is currently The president of Riggs has come to you for advice. "It would cost me $270 to make the sails," she says, "but only $250 to buy them. something? Should I continue buying them, or have I missed 1. Prepare an incremental analysis to determine whether Riggs should make or continue to buy the sails. 2. 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 (1) change? Support your answer with calculations. 3. Identify two qualitative factors that should be considered by Riggs in this make-or-buy decision