Riggs Company purchases sails and produces sailboats It currently produces 1 230 sailboats per year...
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Riggs Company purchases sails and produces sailboats It currently produces 1 230 sailboats per year operating at normal capacity which is about 80 of full capacity Riggs purchases sails at 258 cach 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 81 for direct labor and 90 for overhead The 90 overhead is based on 78 720 of annual fixed overhead that is allocated using normal capacity The president of Riggs has come to you for advice It would cost me 269 to make the sails she says but only 258 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 eg 45 Direct material Direct labor Variable overhead Purchase price Total unit cost S Riggs should 50 Should Riggs make or buy the sails Make Sails eTextbook and Media the sails 59 S 16 Buy Sails Net Income Increase Decrease
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