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Riggs Company purchases sails and produces sailboats. It currently produces 1.2510 sailboats per yea r. operating at normal capacity. which is about 30% of full
Riggs Company purchases sails and produces sailboats. It currently produces 1.2510 sailboats per yea r. operating at normal capacity. which is about 30% of full capacity. Riggs purchasa sails at $255 ea ch. but the company is considering using the excas capacity to manufacture the sails instead. The manufacturing cost per sail would be $91 for direct materials. 390 for direct la tor. and $90 for overhead. The $90 overhead is based on HEEL-10 of annual xed overhead that is allocated using normal capacity. The president of Riggs has co me to you for advice. \"It would cost me 323% to make the sails.\" she says. "but only $256 to buy the rn. Should I continue buying the rn. or have I missed sor'n ething?\" la] 'r'our Answer Correct Answer {Us ed:- V" Your answer is correct Prepare a per unit analysis of the differential costs. [Enter negative amounis using eithern negative sign preceding the number eg. 415 or parentheses eg. [45L] Net Income Ma ke Sails Buyr Sails Increase [Decrease] Purchase price ':| 256 i 256 Totalunitcost 5 i $ 256 i $ Should Riggs make or buy the sails?I Riggs should the sails.
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