Riggs Company purchases sails and produces sailboats. It currently produces 1,250 sailboats per year, operating at normal capacity, which is about 80% of full capacity. Riggs purchases sails at $262 each, but the company is considering using the excess capacity to manufacture the sails instead. The manufacturing cost per sail would be $94 for direct materials, $84 for direct labor, and $90 for overhead. The $90 overhead is based on $77,500 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 $262 to buy them. Should I continue buying them, or have I missed something?

(a) Prepare a per unit analysis of the differential costs. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Exercise 7-7 a-b (Part Level Submission) (Video) Riggs Company purchases sails and produces sailboats. It currently produces 1,250 sailboats per year, operating at normal capacity, which is about 80% of full capacity. Riggs purchases sails at $262 each, but the company is considering using the excess capacity to manufacture the sails instead. The manufacturing cost per sail would be $94 for direct materials, $84 for direct labor, and $90 for overhead. The $90 overhead is based on $77,500 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 $262 to buy them. Should I continue buying them, or have I missed something?" (a) Prepare a per unit analysis of the differential costs. (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Make Sails Net Income Increase (Decrease) Buy Sails Direct material $ Direct labor Variable overhead Purchase price Total unit cost Should Riggs make or buy the sails? Riggs should the sails. By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor. Attempts: 0 of 3 used SAVE FOR LATER SUBMIT ANSWER (b) The parts of this question must be completed in order. This part will be available when you complete the part above