Pharoah Company purchases sails and produces sailboats. It currently produces 1.220 sailboats per year. operating at normal capacity. which is about 80% of full capacity. Pharoah purchases sails at $261 each, but the company is considering using the excess capacity to manufacture the sails instead. The manufacturing cost per sail would be 596 for direct materials. $80 for direct labor, and $90 for overhead. The 590 overhead is based on $78.080 of annual fixed overhead that is allocated using normal capacity. The president of Pharoah has come to you for advice. It would cost me $266 to make the sails, she says. "but only $261 to buy them. Shouldi continue buying them. or have missed something la Your answer is correct. Prepare a per unit analysis of the differential costs. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses es (45).) Net Income Increase (Decrease) Make Sails Buy Sails Net Income Increase (Decrease) Make Sails Buy Sails Direct material 96 $ ZA i $ 96 Direct labor 80 i 80 Variable overhead 26 26 261 -261 Purchase price $ $ 261 -59 $ 202 Total unit cost Should Pharoah make or buy the sails? Pharoah should make the sails. Assistance Used e Textbook and Media If Pharoah 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? Yes This is because the net income will Increase 31720 v by $ v Assistance Used e Textbook and Media