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Sheridan Ranch Inc has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 51% 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 31.700 curtain rods per yeat. A supplier offers to make a pair of finials at a price of $13.05 per unit. If Sheridan Ranch accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $46,900 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 finals. (Enter negative amounts using either a negative sign preceding the number es. 45 or parentheses es (45)) Make Net Income Increase (Decrease) Buy Direct materials $ $ $ Direct labor Variable overhead costs Fixed manufacturing costs Purchase price Total annual cost $ (6) Should Sheridan Ranch buy the finials? Sheridan Ranch should the finials (c) Would your answer be different in (b) if the productive capacity released by not making the finals could be used to produce income of $53,8007 income would ~ bys

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