The U.S. Army has approached Klean Fiber and expressed an interest lll pulung Y-Go undergarments for soldiers in extremely warm climates. The Army would pay the un direct materials, direct labor, and variable manufacturing overhead costs. In addition, the agreed to pay an additional $1 per undergarment to cover all other costs and provide a profit Klean Fiber is operating at 70% capacity and does not have any other potential buyers for Klean fiber accepts the Army's offer, it will not incur any variable seinng expenses relats Sing 2505 the unit cost for on the Army has rofit. Presently, ers for Y-Go. es related to this order. Instructions Using incremental analysis, determine whether Klean Fiber should accept the Army's offer. E7.5 (LO 3), AN Pottery Ranch Inc. has been manufacturing its own finials for its curtain rode u company is currently operating at 100% of capacity, and variable manufacturing overhead is charon to production at the rate of 70% of direct labor cost. The direct materials and direct labor cost per unit to make a pair of finials are $4 and $5, respectively. Normal production is 30,000 curtain rods per year. A supplier offers to make a pair of finials at a price of $12.95 per unit. If Pottery Ranch accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $45,000 of fixed manufac. turing overhead currently being charged to the finials will have to be absorbed by other products. Instructions a. Prepare the incremental analysis for the decision to make or buy the finials. b. Should Pottery Ranch buy the finials? c. Would your answer be different in (b) if the productive capacity released by not making the line could be used to produce income of $20,000