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Sheridan Company purchases sails and produces sailboats. It currently produces 1 , 2 7 0 sailboats per year, operating at normal capacity, which is about

Sheridan Company purchases sails and produces sailboats. It currently produces 1,270 sailboats per year, operating at normal capacity, which is about 80% of full capacity. Sheridan purchases sails at $268 each, but the company is considering using the excess capacity to manufacture the sails instead. The manufacturing cost per sail would be $98 for direct materials, $86 for direct labor, and $90 for total manufacturing overhead. The $90 total manufacturing overhead includes $78,740 of annual fixed overhead that is allocated using normal capacity.
The president of Sheridan has come to you for advice. "It would cost me $274 to make the sails," she says, "but only $268 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 eg.-45 or parentheses e.g.(45).)
Should Sheridan make or buy the sails?
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