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Question 27 of 30 < -/10 E Riggs Company purchases sails and produces sailboats. It currently produces 1.280 sailboats per year, operating at normal
Question 27 of 30 < -/10 E Riggs Company purchases sails and produces sailboats. It currently produces 1.280 sailboats per year, operating at normal capacity. which is about 80% of full capacity. Riggs purchases sails at $258 each, but the company is considering using the excess capacity to manufacture the sails instead. The manufacturing cost per sail would be $91 for direct materials, $87 for direct labor, and $90 for overhead. The $90 overhead is based on $78,080 of annual fixed overhead that is allocated using normal capacity The president of Riggs has come to you for advice. "It would cost me $268 to make the sails," she says, "but only $258 to buy them d1 continue buying them, or have I missed something?" Should I (a) Prepare a per unit analysis of the differential costs. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses es (45)) Make Sails Buy Sails Net Income Increase (Decrease) Direct material $ Direct labor Variable overhead Purchase price Total unit cost $ Should Riggs make or buy the sails? Riggs should the sails.
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