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 56% 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 31,100 curtain rods per year. A supplier offers to make a pair of finials at a price of $13.30 per unit. If Pottery Ranch accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $47,500 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 finials. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45)) Make 121601 Direct materials Direct labor 151768 Variable overhead costs Fixed manufacturing costs Purchase price Total annual cost (b) Should Pottery Ranch buy the finials? Buy Net Income Increase (Decrease) 121601 151768 84,900 0 84.990 358,359 0 413,941 No Pottery Ranch should not buy the finials 0 -413,941 413941 55,682 0 (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 $54,950? Yes income would increase by $ 8,300 Textbook and Media