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 of63% of direct labor cost. The direct materials and direct labor cost per unit to make a pair of finials are $4and $5, respectively. Normal production is32,100curtain rods per year.

A supplier offers to make a pair of finials at a price of $13.35per unit. If Pottery Ranch accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $49,400of 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 e.g. -45 or parentheses e.g. (45).)

Make Buy Net Income

Increase (Decrease)

Direct Materials

Direct Labor

Variable overhead costs

Fixed manufacturing costs

Purchase price

Total annual cost

(b) Should Pottery Ranch buy the finials?

Yes or no Pottery Ranch should Buy or not buy the finals

(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 $44,920?

yes or no , income wouldselect between increase and decrease by $

enter a dollar amount