Oriole Ranch Inc. has been manufacturing its own finials for its curtain rods. The company...
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Oriole Ranch Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at of capacity, and variable manufacturing overhead is charged to production at the rate of of direct labor cost. The direct materials and direct labor cost per unit to make a pair of finials are $ and $ respectively. Normall production is curtain rods per year.
A supplier offers to make a pair of finials at a price of $ per unit. If Oriole Ranch accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $ of fixed manufacturing overhead currently being charged to the finials will have to be absorbed by other products.
a
Prepare the incremental analysis for the decision to make or buy the finials. Enter negative amounts using either a negative sign preceding the number eg or parentheses eg
b
Should Oriole Ranch buy the finials?
Oriole Ranch should the finials.
c
Would your answer be different in b if the productive capacity released by not making the finials could be used to produce income of $
income would
by $
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