Riggs Company purchases sails and produces sailboats. It currently produces 1,200 sailboats per year, operating at normal capacity, which is about 80% of full capacity. Riggs purchases sails at $253 each, but the company is considering using the excess capacity to manufacture the sails instead. The manufacturing cost per sail would be $99.21 for direct materials, $84.58 for direct labor, and $90 for overhead. The $90 overhead includes $78,100 of annual fixed overhead that is allocated using normal capacity. The president of Riggs has come to you for advice. It would cost me $273.79 to make the sails, she says, but only $253 to buy them. Should I continue buying them, or have I missed something?

Prepare a per unit analysis of the differential costs. (Round answers to 2 decimal places, e.g. 15.75. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Make Sails Buy Sails Net Income Increase (Decrease) Direct material Direct labor Variable overhead Purchase price Total unit cost s Should Riggs make or buy the sails? Riggs should the sails. If Riggs suddenly finds an opportunity to rent out the unused capacity of its factory for $77,900 per year, would your answer to part (a) change? . This is because the net income will by $ Click if you would like to Show Work for this question: Open Show Work