Sheffield Inc. has been manufacturing its own shades for its table lamps. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 50% of direct labour costs. The direct materials and direct labour costs per unit to make the lampshades are $4.80 and $5.60, respectively. Normal production is 50,900 table lamps per year. A supplier offers to make the lampshades at a price of $13.50 per unit. If Sheffield Inc. accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $42,300 of fixed manufacturing overhead currently being charged to the lampshades will have to be absorbed by other products. (a) Your answer is partially correct. Prepare the incremental analysis for the decision to make or buy the lampshades. (Round answers to decimal places, eg. 5,275. If an amount reduces the net income then enter with a negative sign preceding the number eg. -15,000 or parenthesis, eg. (15,000). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) Number of units: 50,900 Net Increase Make Buy Direct materials 244,320 $ Direct labour 285,040 Variable manufacturing overhead 142,520 Purchase price 687.150 Direct labour 42,300 42,300 Total annual cost $ 714,180 $ 729,450 $ eTextbook and Media Attempts: 2 of 2 used