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Pottery Carla Vista Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity, and variable

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Pottery Carla Vista 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 69% 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 26,600 curtain rods per year. A supplier offers to make a pair of finials at a price of $13.30 per unit. If Pottery Carla Vista accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $45,100 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 finals (Enter negative amounts using either a negative sign preceding the number eg, -45 or parentheses es (451) Net Income Increase (Decrease) Make Buy Direct materials $ $ Direct labor Variable overhead costs MINE DUNIA DOOD Fixed manufacturing costs Purchase price Total annual cost $ $ $ (6) Should Pottery Carla Vista buy the finials? No Pottery Carla Vista should not buy 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 $30,110? Yes Income would Increase by $

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