Pottery Ranch 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 61% of direct labor cost. The direct materials and direct labor cost per unit to make a pair of finials are $3.73 and $4.69, respectively. Normal production is 33,300 curtain rods per year. A supplier offers to make a pair of finials at a price of $12.90 per unit. If Pottery Ranch accepts the suppliers offer, all variable manufacturing costs will be eliminated, but the $49,200 of fixed manufacturing overhead currently being charged to the finials will have to be absorbed by other products. (a) Prepare an incremental analysis to decide if Pottery Ranch should buy the finials.

(b) Should Pottery Ranch 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 $60,716?

Pottery Ranch Inc. of frials are $3.73 and 4.60, respectely. Nomal production&33,300 curtain roda per wear a carrently ot capaoty, and has been m an act n its own hnals or ta on ain rods The company d arating at 10% o capac y, and var able manufactunn overhead dar ed to producten at the rate of 61% d direct labor cast. The direct matea and d ect aboro at par un t to make a pair A supplier r to make a pair c hniala at a price of s1 2.9 nit. It ttery Ranch accepta the supplier at er, all arable ma uta tu r osts wil be el inated but the40,200 at t man tact nr overhead currenti beng char ed to the na wll ha e to be a aarbed b othar products. Prepare an inremental anaysis to deade if Pattery Ranch should buy tha finials. (Fater negative amounts using ethera negative siga preceding the auher eg. 45 or parentheses &.g. (45)- Make Direct matenals Direct labor ariable overheed costs Fixed manufact unng cests Purchase price Tatal annual cost Should Pottery Ranch buy the firials Pottery Ranch | the finials. Would your answer be different in (b) if the productive capacity releszed by not making the finiis could be used to produce income of $60,10 income would by