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 $50\%$ 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 $25,000$ curtain rods per

year.

A supplier offers to make a pair of finials at a price of $$12\mathrm{.}75$ per unit. If Pottery

Ranch accepts the supplier's offer, all variable manufacturing costs will be

eliminated, but the $$40,000$ 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 $t$

$($Enter negative amounts using either a negative sign preceding the nun